Arsenal stars 'paid millions in offshore tax dodge'

The high-profile divorce of Arsenal star Ray Parlour has unearthed a multi-million pound tax dodge at the country’s top football club, it was reported today.

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 Sunday Times said.

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 rate of 40%, and a second that pays an array of performance-related bonuses, the newspaper said.

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 front companies in to trusts which can result in no tax or as little as 1% being paid.

In one season alone, some £7.6m (€11.4m) 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 (€114,000) tax, the newspaper investigation said.

In 2001, Arsenal is said to have set up a firm called Sevco 1270, in which players are shareholders, that 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 pounds.

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 (EBT), 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 the City, but finance experts told the newspaper the Inland Revenue is taking a “very active interest” in such schemes and they are regarded as unethical.

Liberal Democrat Treasury spokesman Norman Lamb told the newspaper: “It sticks in the throat that these mega-rich players are able to avoid their responsibilities to the country.”

A spokesman for the club told the paper employee contracts were strictly confidential.