The high-profile divorce of Arsenal star Ray Parlour has exposed a multi-million-pound tax dodge at the country's top football club, it was reported last night.
Bonuses paid to players and the manager, amounting to millions each season, are paid in to offshore trusts and secretive front companies to avoid tax, according to The Sunday Times.
The legal, but widely condemned, tactic only emerged when midfielder Parlour had to disclose all his earnings and bonuses during his divorce settlement to ex-wife Karen at the Court of Appeal earlier this month.
Top names at Arsenal are said to sign two contracts, one for their annual basic wage, which is taxed at the normal top rate of 40 per cent, and a second that pays an array of performance-related bonuses, the newspaper said. Bonuses, including rewards for success in the Premiership, FA Cup, European championships and other competitions, can account for up to half of total pay packets.
They are paid via two front companies in to trusts, which can result in no tax or as little as 1 per cent being paid. In one season alone, £7.6m of the club's wage bill is estimated to have been channelled through one of the trusts, with nearly 30 players having to pay a total of just £76,000 tax, the newspaper investigation said. British stars such as Parlour, Ashley Cole and former goalkeeper David Seaman are said to have cut their tax to 25 per cent.
The club has also set up what is known as an employee benefit trust, through which bonuses are "loaned" to players but, in reality, are never paid back. A spokesman for the club told the paper employee contracts were strictly confidential. (PA)
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