Arsenal's tax dodge gets yellow card from revenue
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.
The legal, but widely condemned, tactic only emerged when midfielder Parlour had to disclose all his earnings and bonuses during his divorce settlement with 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 rate of 40%, and a second that pays an array of performance-related bonuses.
Bonuses, including rewards for success in the likes of the Premiership, FA Cup and European competitions, can account for up to half of total pay packets.
They are paid via two companies in to trusts which can result in as little as 1% being paid.
In one season alone, some e11 million of the club's wage bill is estimated to have been channeled through one of the trusts, with nearly 30 players having to pay a total of just €114,000 tax, according to an investigation by the Sunday Times.
In 2001, Arsenal is said to have set up a firm called Sevco 1270, in which players are shareholders, which paid bonuses on their behalf to a Jersey-based trust.
Foreign names like strikers Thierry Henry and Dennis Bergkamp and manager Arsene Wenger are said to have saved tens of thousands of euros.
British stars like Parlour, Ashley Cole and former keeper David Seaman are said to have cut their tax to 25%.
The club has also set up what is known as a employee benefit trust, through which bonuses are "loaned" to players but, in reality, are never paid back.
The tax on such loans is just 1%, rather than 41% had they been paid directly.
The tactics are legal, and are often seen in among city companies. However, a spokesperson for the Inland Revenue said they are taking a "very active interest" in such schemes and they are regarded as unethical.
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