Taxman catches up with Rossi for £26m

Italian legend agrees settlement with authorities but it could have been £83m

Rossi's problems exploded last August when he was notified of what he supposedly owed the tax authority - the sum of £83m (AP)

The seven-times world motorcycling champion Valentino Rossi, 28, will be £26m poorer as a result of his settlement yesterday with the income tax authorities in his native province of Pesaro, on the Adriatic. But it could have been a lot worse: the Yamaha rider was originally threatened with a bill for £83m.

Wearing a severe new haircut but with the same cherubic smile on his unageing face, the champion met the press yesterday after signing the agreement with the tax authorities and explained that he had cut the deal for the sake of his peace of mind.

Rossi had failed to pay tax in Italy since 2000, having changed his domicile to London. But the Italian authorities claimed that he was only resident in Britain in name, and in fact maintained a secret home in the town of Tavullia, where his family lives. "I already had the intention of returning to Italy," he told reporters, "and this affair has only speeded things up. In a few more months the thing would have happened of its own accord.

"I feel I have cleaned my conscience, and in all these months I have never felt alone, people have stood beside me right through it."

Rossi's problems exploded last August when he was notified of what he supposedly owed the tax authority – the sum of £83m. Days later the news was released to the media and the darling of Italy, rival with Francesco Totti for the greatest number of sponsorship deals, was suddenly in the doghouse where other stars including Luciano Pavarotti had been before him. In the following months his grinning, puckish image has all but vanished from view.

Accompanied at the press conference by his father Graziano and his accountant Francesca Mainardi, he said that he never had any doubt about whether to plump for a long and vicious court battle – which his tax specialist, Victor Uckmar, who was not present yesterday, has said that he believed he would have won – or the end of the stress which he had incurred.

"I don't even want to know how it might have finished if I had chosen to fight it out," he said, "but I do know that it's much more important to be serene, in order to ride my bike better. I will keep trying to go better." He added, with his trade mark simplicity, "because when I'm in the race, people get more fun out of it."

It was in March 2000 that Rossi "moved" to London and logged his name in the register of Italians living abroad. Subsequently he closed his VAT account with the Italian revenue authorities – who promptly began to keep tabs on where he was actually spending his time. The secret investigation went forward and in 2003 the Italians obtained the cooperation of their counterparts in Britain, Japan, Spain and Ireland. The point of the investigation was to establish that, despite his claims, Italy remained the centre of his interests and his businesses.

Rossi told reporters that he took sole responsibility for his problems. "I said yes [to the idea of living in Britain] from the first moment I went to London," he said, "but when you are young sometimes you let yourself be guided by the people who are working for you.

"London," he went on, "was a beautiful experience, but I've had an ever greater need to come home. Now this situation is over, things are better." He denied, however, that he planned to move back in with his mum, saying that he was "no longer a big kid".

The director of the Pesaro tax authorities, Massimo Romano, beaming slightly more broadly than the champion, praised Rossi as "an example of straightforwardness and correctness," capable of disbursing himself of £26m without allowing his jovial smile to slip.

The press conference was disrupted by the chanting of employees of the tax authority demonstrating outside the room about the authority's failure to come to terms with them on a new contract. Cries of "Shame!" and "Contract" drifted into the hall. A leaflet handed out by the demonstrators complained that "the champion has been given a 90 per cent discount."

Why Piggott spent 366 days in jail

After retiring from riding at the end of the 1985 flat season, Lester Piggott became a trainer, but in 1987 he was jailed for three years for failing to declare income of £3.2m, using secret bank accounts in Switzerland, the Bahamas, Singapore and the Cayman Islands. He served 366 days in prison and was subsequently stripped of his OBE.