Manchester City Accused of £12m Tax Avoidance Over Mancini Contract

Manchester City are facing fresh allegations after an analysis by think tank Tax Policy Associates suggested the club may have avoided paying around £12 million in income tax and National Insurance contributions linked to former manager Roberto Mancini's contract.

According to the report, the English champions could be hit with a tax bill and penalties totaling up to £24 million. The issue centers on an alleged sham consultancy agreement with Abu Dhabi-based Al Jazira Sports and Cultural Club, used to route payments to the Italian coach.

The findings build on the conclusions of the independent commission that previously scrutinized Manchester City over extensive breaches of Premier League financial regulations. That investigation revealed the club operated a disguised equity funding model, where majority owner Abu Dhabi United Group (ADUG) funded sponsorship deals that were recorded as operating revenue.

In its decision, the commission deemed the consultancy agreement a sham. Although the relevant document was redacted and did not explicitly mention Mancini by name, leaked data indicates that £8.866 million was ultimately paid to companies linked to him.

Dan Neidle, head of Tax Policy Associates and a former leading tax partner at Clifford Chance, emphasized that these payments constituted remuneration for Mancini's work at Manchester City and should have been declared and taxed under UK law. With interest and potential penalties included, the club's total liability could reach between £23 million and £24 million.

Although Mancini could theoretically be held liable for the taxes under the law, HMRC practice is typically to recover the unpaid sums from the employer. The organization also questioned whether the situation warrants a criminal investigation into tax evasion or false accounting.

"It is important to clarify that we are not alleging specific individuals at Manchester City or Mr Mancini committed a crime," the report stated. "However, we believe there are sufficient grounds for a criminal investigation into the circumstances surrounding the creation of the sham arrangement and the failure to pay the taxes due."

Manchester City did not respond to a request for comment from Tax Policy Associates. Mancini, meanwhile, has previously maintained that the topic of his alleged dual contracts is not his concern and is an issue solely for the club.

City's hierarchy continues to strongly deny all Premier League charges, maintaining they hold irrefutable evidence of their innocence. Chief executive Ferran Soriano previously assured that the club possesses bank statements, transfer records, and witness testimony proving the funds did not come directly from the owner.