Report Mancini sham contract let Manchester City avoid £12m in tax

MANCHESTER, ENGLAND - APRIL 17: Manchester City Manager Roberto Mancini gestures during the Barclays Premier League match between Manchester City and Wigan Athletic at the Etihad Stadium on April 17, 2013 in Manchester, England. (Photo by Alex Livesey/Getty Images)

Italy coach Roberto Mancini and Manchester City are accused of potentially avoiding £12m in income tax and national insurance over his controversial double contract, which could prompt a criminal investigation.

Part of the over 100 charges that the club was found guilty of by the Premier League independent commission was of using a “disguised funding scheme” to pay then-coach Mancini an extra salary.

Although the official report is heavily redacted, the leaked documents via Der Spiegel, L’Espresso and others suggest the individual was Mancini.

How Mancini’s contracts worked

It was achieved by giving the Italian a regular contract at Manchester City worth £1.45m per season net, after deduction of tax.

On the same day, he signed another contract with Al Jazira for a “Consulting Agreement” worth £1.75m per year for coaching services in Abu Dhabi for “a minimum of 4 days per year.”

This would be paid without deduction of tax by Al Jazira, a club that like Manchester City is owned by Sheikh Mansoor.

Tax Policy Associates looked through the leaked documents and found that Mancini’s company Sparkleglow, based in Mauritius, was paid the precise sum for the first year of the Al Jazira contract by Manchester City instead, and it was authorised by the head of finance at Manchester City.

When Mancini’s lawyer tried to renegotiate the consultancy contract in 2011, rather than contacting Al Jazira, she wrote to Manchester City chief executive Garry Cook, so the Premier League investigation dubbed this “a sham.”

Italian tax was paid on this consultancy fee, but not British tax, so the report including from The Telegraph suggests Manchester City should’ve paid circa £12m between income tax and employee National Insurance.

The report from Tax Policy Associates explains that because Mancini’s deal was “net,” the saving was made by Manchester City here and not by the current Italy coach.

Notably, it is implied that HMRC have probably already opened an enquiry into this, so adding interest and a penalty, it could cost the Premier League club up to £24m.

It could feasibly also prompt a criminal investigation into whether tax offences or false accounting offences were committed.

Mancini has already been asked about the matter when preparing for Italy’s next Nations League game against France, noting “the alleged double contract is not my concern. It’s their issue, not mine.”