From its inception, the Guernsey Image Right was never a tax product, but an IP one. It is ironic, therefore, that a synopsis of the benefits over unregistered rights has been issued by the body governing the collection of taxes in the UK - HMRC.

In an update to its practice manual HMRC has set out the position relating to image rights in the UK and how the lack of any formal right there potentially impacts upon any sports stars or celebrities who have, or are entering into, contracts for their image rights. In a step by step analysis, HMRC effectively explains the current position in the UK vis-a-vis image rights and the potential tax treatment of those various rights.

To summarise its manual update, HMRC broadly states the following:-


There is no such thing as an image right in the UK. As a result of this, the only way to gain any sort of protection over indicia relating to a personality is through passing off, based on reputation or goodwill. Both of these points are borne out by last year's Rhianna v TopShop case.


When assigning image rights, as there is no such thing in the UK, the only asset that is actually being transferred is therefore goodwill. The establishment of goodwill is something that is dependant upon there being an underlying business in operation. HMRC makes specific reference to the fact that the mere registration of a trade mark, for instance, will not create an asset of value, nor goodwill, without a related business to back it up. In order to properly assign the goodwill (and therefore the image rights), this underlying business has to be transferred, otherwise no effective transfer has taken place.

If it is assumed that the business of many personalities is actually the licensing out of their name and likeness, this total business would have to be assigned to be effective. If the personality does not have any track record of licensing out their image, then no business or goodwill will exist, making any transfer of image rights problematic. This is of particular concern when dealing with young players or performers.

HMRC talks of the Guernsey Image Rights and acknowledges that, due to their registered nature, these may be considered to be readily assignable image rights and not goodwill. This is an important distinction and one which may prove useful to many clients in this position.

Where there is said to have been a disposal of non-UK image rights, questions will be asked by HMRC as to the viability of the image rights regime in the jurisdiction concerned. Again, this is of particular interest as other jurisdictions do not have an established formal regime such as we have in Guernsey.


All of the above demonstrates the benefits of establishing formal rights in Guernsey. These rights not only clarify the rights concerned, but also negate the need for goodwill to have been established, as neither use of the rights nor fame or reputation are required for the registration of the Guernsey rights.

Guernsey has a unique product which has been recognised as providing both clarity and formality over what had previously been an amalgam of non-specific rights trying to be used over and above what they were designed for. The guidance issued by HMRC provides a timely reminder to those in the UK of the benefits of these rights and gives those of us dealing with these rights in Guernsey a valuable insight into HMRC's current thinking on this topical subject.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.