24 February ~ It seems every story about a club in financial trouble now includes the initials HMRC. Recently, the Revenue, as they used to be called, got a mention in the Manchester Utd bond document which referred to a disputed sum of £5.3 million. This was the allegedly unpaid tax on payments to players for "image rights". This an area of player remuneration that is shrouded in confusion. The size of the sum that interests HMRC across football as a whole varies between £60m (cited in the Guardian) and £100m (the Financial Times). Either way it is obvious why football is worried.

Payments for image rights are a common feature of player contracts. The basic idea is that the player "owns" his image and because clubs want to use that image for commercial purposes they make a payment to the player. The "image" includes everything from a representation of the player to his signature or from nicknames to "style characteristics". The most common arrangement is that the club makes a payment to a company established by the player to look after his commercial interests. The company will handle things like sponsorship deals and endorsements alongside the image payments from the club. By doing this, players can limit their tax liability by as much as 50 per cent compared with the tax rate they would pay if the image rights were treated as earned income.

There is nothing wrong or illegal about this. But HMRC argues that not all of the payments made are linked to commercial activities – the "image payments" can be just a ruse to top up the player's income. There isn't much science to the way the value of the image is arrived at and it often just comes down to bargaining. Sometimes. big name players – Ronaldo or Beckham – at major clubs agree to split commercial and image income. It's as important for them as players to be associated with Real Madrid or Manchester Utd as it is for the club to be associated with the player. At this top end it is easy to see the real financial value of image. It is when clubs make payments to lesser known individuals, or players with less "glamour" that bigger problems arise. One report, a couple of years old, showed David Beckham's company (Footwork Productions) had an annual income of £17.3m compared with Gary Neville's Tiger Sports which reported income of £559,000. More recent reports have shown an annual sum of £760,000 for Wayne Rooney.

With these numbers and with pressures on public finance it's easy to see why HMRC is interested – and why the Premier League is keen to try to strike a deal on behalf of all of its clubs to limit their exposure. HMRC has reached similar agreements with the rugby codes, but the sums involved with football make it unlikely that a deal will be easy to arrive at. Perhaps the most unusual part of this whole story is that Newcastle Utd are reportedly paying £675,000 per year for Joey Barton's image rights. Money well spent it seems to me. Brian Simpson

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