CheckLists.Tax (beta)
L3. Sale and assignment of intellectual property
GENERAL
Types of intellectual property
- Image rights not a recognised form of property in English law but is in other jurisidictions
English law
- No property in a person's image in English law (Sports Club Plc, §8, Collingwood, §90).
- "There is in English law no "image right" or "character right" which allows a celebrity to control the use of his or her name or image" (Fenty, §29).
- Alternative routes to protecting:
"[33] A celebrity seeking to control the use of his or her image must therefore rely upon some other cause of action such as breach of contract, breach of confidence, infringement of copyright or, as in this case, passing off. However, as Mr Hobbs has properly reminded us, the law of passing off is not designed to protect a person against fair competition. Nor does it protect a person against the sale by others of the same goods or even copied goods. What it protects is goodwill and it prevents one person passing off his goods or services as those of another." (Fenty).
- HMRC say: "These judicial authorities put beyond doubt that under UK law there is no such thing as an “image right”" (CG68455).
- But a third party can own a right to exploit an individual's image (CG68465).
- This is the grant of a new right rather than the assignment of an existing right.
Other jurisdictions
- HMRC say: "Many jurisdictions outside the UK recognise “image rights”. Most EU countries have some right protecting commercial use of an individual’s name or image, whilst France and Germany in particular have strong image right and personality right laws. Guernsey recently introduced a comprehensive system for registering image rights. Over 30 States in the USA also have some form of image or publicity right. So where non-UK “image rights” are concerned, it is important to establish the nature of the rights and the relevant jurisdiction." (CG68450).
Legislation:
Cases:
Sports Club Plc v. Inspector of Taxes [2000] STC (SCD) 443;
Fenty v. Arcadia Group Brands Limited [2015] EWCA Civ 3;
Collingwood v. HMRC [2025] UKFTT 1065 (TC);
HMRC manuals:
CG68450 - Intellectual Property Rights: image rights: image rights in the UK;
CG68455 - Intellectual Property Rights: image rights: law of passing-off;
CG68465 - Intellectual Property Rights: image rights: CGT implications: what else if not CGT;
Commentary:
See also:
- Goodwill
Nature of goodwill
- Whatever adds value to a business by reason of situation, name, reputation, connection etc:
"Goodwill regarded as property has no meaning except in connection with some trade, business, or calling. In that connection I understand the word to include whatever adds value to a business by reason of situation, name and reputation, connection, introduction to old customers, and agreed absence from competition, or any of these things, and there may be others which do not occur to me. In this wide sense, goodwill is inseparable from the business to which it adds value." (Muller at 235)
- Not transferable separately from the business giving rise to the goodwill: "the case law on legal goodwill confirms that legal goodwill is inseparable from the business out of which it arises" (Milton Park, §223).
- Local in character and divisible (e.g. if business is carried on in multiple countries) (Star Industrial at 269; Geraghty, §17).
Ownership of goodwill
- Goodwill of partnership cannot be owned by a non-partner: "At the time of the transactions MPHL was not a partner of the MCP and we accept that the case law to which we have been referred does not support the Appellants' submission that law allows goodwill of partnership to be owned by a non-partner." (Milton Park, §232).
- But the goodwill may not be a partnership asset (see Milton Park, §241 - 242 - presumption that partnership owns goodwill not rebutted on facts, §244).
Transfer of goodwill
- Transfer of business of exploiting image of another may involve transfer of some goodwill (CG68465).
Licence of goodwill
- "Fundamental to the law's recognition that goodwill is transferable in connection with the continuing business to which it is attached is the notion that goodwill attaches to the business, not to its proprietor nor to the person who happens to carry it on. Once this is accepted, it necessarily follows that the owner of a business may license another person to conduct the business, in which event the goodwill of the business, attaching to the business, passes to the licensee, most certainly when there is an express assignment of goodwill. In principle, there is no difference between this case and the sale and transfer of a business to another followed by a re-sale and transfer back to the original owner." (TTYP).
Legislation:
Cases:
IRC v Muller & Co's Margarine Ltd [1901] AC 217;
Tin Tin Yat Pao v Tin Tin [2000] IP & T 1109;
Star Industrial Co Ltd v Yap Kwee Kor (t/a New Star Industrial Co) [1976] FSR 256;
Geraghty v Minter [1979] HCA 42;
Milton Park Holdings Ltd v. HMRC [2025] UKFTT 1353 (TC), Judge Williams;
HMRC manuals:
Commentary:
CG68465 - Intellectual Property Rights: image rights: CGT implications: what else if not CGT;
See also:
- Trademarks
XX
Legislation:
Cases:
HMRC manuals:
Commentary:
See also:
- Client information
- Licence to use a client list, data and information relating to the client list was an intangible fixed asset (giving rise to amortisation) in Ripe.
Legislation:
Cases:
Ripe Limited [2025] UKFTT 1606 (TC), Judge Morgan;
HMRC manuals:
Commentary:
See also:
Validity and effectiveness of assignment
- Image rights related
- Ineffective attempt to assign the benefit of promotional contracts entered into by the player in Collingwood where the assignment contract purported to assign only "intellectual property rights" after the contracts had already been entered into (§§88, 90).
- Query whether it would have been effective anyway - see A5. Individual receiving or entitled to income.
Legislation:
Cases:
Collingwood v. HMRC [2025] UKFTT 1065 (TC), Judge Manyarara;
HMRC manuals:
Commentary:
See also:
- Acquisition of goodwill
- No acquisition of goodwill where person did not acquire control and did not have risks and rewards of business (Milton Park, §250).
Legislation:
Cases:
Milton Park Holdings Ltd v. HMRC [2025] UKFTT 1353 (TC), Judge Williams;
HMRC manuals:
Commentary:
See also:
INCOME TAX
Whether assignment effective to transfer tax liability on income
- XX
see A5. Individual receiving or entitled to income.
Legislation:
Cases:
HMRC manuals:
Commentary:
See also:
Sale of occupation income
- Income tax on amounts purportedly paid for goodwill
- See XX
Legislation:
Cases:
Grint v. HMRC [2024] UKFTT 956 (TC), Judge Morgan;
HMRC manuals:
Commentary:
See also:
CORPORATION TAX
Sale of occupation income
- Transfer between related parties
General rule
- Transfer between related parties treated as being at market value (CTA 2009, s.845).
Related parties
- CTA 2009, s.835.
Legislation:
Cases:
HMRC manuals:
Commentary:
See also:
Capital gains
Wasting asset
IP with less than 50 years left to run is a wasting asset.
Legislation: TCGA s.44.
Cases:
HMRC manuals: CG76723
Commentary:
See also:
Foreign situs?
Legislation: TCGA s.275
Cases:
HMRC manuals:
Commentary:
See also: