What is Image Rights Company?

Full Definition

An image rights company (IRC) is a legal vehicle -- usually a private limited company -- set up to hold and exploit the commercial value of a specific individual's image, name, likeness, voice, or brand. The arrangement is most common in professional sport and entertainment, where endorsement deals, sponsorship income, and appearance fees can be substantial. By routing such payments through a company rather than receiving them personally, the individual may benefit from corporation tax on company profits (currently 25% for large companies, 19% for small profits) rather than income tax at up to 45%, before extracting retained profits as dividends. HMRC takes a close interest in image rights arrangements and has challenged many cases where the commercial value assigned to image rights was considered disproportionate to what a person's image could genuinely command. To withstand scrutiny, an IRC must reflect genuine commercial value -- there should be evidence of actual third-party demand for the image, a credible valuation basis, and a real transfer of intellectual property rights to the company. HMRC's spotlight guidance makes clear that arrangements that simply divert employment income through an IRC to reduce tax are likely to be challenged under the disguised remuneration or employment income anti-avoidance rules. Image rights companies differ from personal service companies (PSCs) in that they relate specifically to IP in the individual's persona rather than to the provision of services. However, the boundaries can overlap -- a footballer who also provides coaching services through the same company may face mixed analysis. Separate company formation costs, annual accounts, corporation tax returns, and appropriate legal agreements are all necessary for a properly run IRC. Professional advice from a specialist tax adviser is essential before establishing such a structure.

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