HMRC investigations of footballers have almost trebled from 87 to 246 over the last 12 months. HMRC is targeting ‘image rights’ deals that it believes are being used to avoid tax.

The number of enquiries into both footballers and football agents is on the rise, with much emphasis on the use of image rights companies. According to research by accountancy firm UHY Hacker Young the number of players under investigation is now almost equivalent to ten 25-man Premier League squads.

“The reason for this increase in enquiries is likely to be two-fold – a combination of the potentially significant yield due to the amounts paid to top-tier footballers, together with the natural consequence of HMRC successes in challenging perceived “tax avoidance” more generally”, said Sarah Stenton, Tax Director at Stewarts, the UK’s largest litigation-only law firm.

“Image rights is a perfectly legitimate tax structure – as long as it is implemented correctly,” said Sarah. “Rights allow monies earned directly from the use of a footballers “image” (for example, endorsing products) to be paid into a company, rather than as a wage, thereby paying tax at the company rate of 19%, rather than the highest rate of 45% if paid as wages.

“Naturally there has been some misuse of image rights that HMRC have spent many years now challenging. The sudden increase in enquiries into footballers and football agencies could therefore be a natural consequence of more footballers using, and potentially abusing, such structures.”

It is becoming increasingly standard practice for players to negotiate image rights, both for those able to attract the largest image rights fees and for those still building their personal brands.

So far, most of the image rights cases opened and closed by the HMRC have had minimal tax adjustments required to justify them. It could also be argued that HMRC have applied an inconsistent message in the crux of their challenge against image rights; often challenging different footballers using different sections of tax legislation to suit its purposes.