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Portsmouth's court appearance to set a legal precedent

Fri 30th Jul 2010 | Legal

The topic of image rights will rear its ugly head when Portsmouth Football Club enters the High Court next Tuesday.

The south coast will defend themselves against HMRC who have a claim against the club for £18.2m in "unpaid taxes of the image rights of certain players". The decision next week will be watched in anticipation by every UK football club – as well as those in rugby and cricket – who give their players an image rights payment as part of their salaries.

The case is expected to provide HMRC with an opportunity to set legal precedent for the entire sports industry and they are confident of convincing the court that Portsmouth have been avoiding tax.

The Guardian has reported that officials will point to the alleged existence of a contract with Sol Campbell entitling him to £1.67m a year in image rights payments. At the time Portsmouth were earning only £7.2m a year from all their merchandising and sponsorship activities, meaning one pound in every five the club received was allegedly going to Campbell's offshore account.

Assuming Portsmouth paid no tax on any image rights payments and HMRC are claiming £18.2m, their total image rights commitments amounted to £45.5m – an astronomical sum. (If they did pay some tax then the £45.5m rises still further.)

It’s suggested that many UK sports clubs will be supporting Portsmouth on Tuesday. But as HMRC makes this a test case, those clubs might equally wish it was someone else going in to bat for them.

If you have any football business related news stories you’d like to share then please contact us – agourley@fcbusiness.co.uk or ryan@fcbusiness.co.uk

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