Manchester City could face a tax bill of up to £24m over allegations involving a second contract arranged for former manager Roberto Mancini, according to a report examining the Premier League commission’s findings.
The claims concern a potential £12m liability in income tax and National Insurance and could also lead to a criminal investigation into possible tax or false-accounting offences.
The issue formed part of the more than 100 charges against Manchester City on which the club was found guilty by an independent Premier League commission. One allegation involved a “disguised funding scheme” used to provide Mancini with additional payments while he was in charge.
Although much of the commission’s published report is redacted, documents leaked through Der Spiegel, L’Espresso and other outlets indicate that the unnamed individual referred to was Mancini.
The Italian was paid £1.45m per season net under his official Manchester City contract, meaning tax had already been deducted. On the same day, he signed a separate “Consulting Agreement” with Al Jazira worth £1.75m a year for coaching services in Abu Dhabi.
That agreement required him to provide services for “a minimum of 4 days per year”. The payment was due to be made by Al Jazira without tax deductions. The club, like Manchester City, is owned by Sheikh Mansoor.
Tax Policy Associates reviewed the leaked material and said Mancini’s Mauritius-based company, Sparkleglow, received exactly the amount due under the first year of the Al Jazira agreement. However, the payment was made by Manchester City and authorised by the club’s head of finance.
The arrangement was later described as “a sham” in the Premier League investigation. In 2011, when Mancini’s lawyer sought to renegotiate the consultancy agreement, she contacted Manchester City chief executive Garry Cook rather than Al Jazira.
Italian tax was paid on the consultancy income, but British tax was not. A report, including one from The Telegraph, said Manchester City should have paid approximately £12m in income tax and employee National Insurance.
Tax Policy Associates said the contract being structured on a net basis meant the financial benefit went to Manchester City rather than Mancini.
The report also suggested that HMRC had probably already opened an enquiry into the matter. If interest and penalties were added, the potential cost to the club could rise to £24m.
Mancini was asked about the allegations while preparing Italy for their next Nations League match against France. He said: “The alleged double contract is not my concern. It’s their issue, not mine.”
