Blow for new England coach as Capello comes under investigation for tax evasion

He has now come under suspicion of diverting income from sponsorship deals during that time into a bank account in Luxembourg.

The Turin attorney's office has opened an investigation into Capello's financial affairs. And they could yet extend their probe to cover his time in charge of other Serie A clubs.

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The news will come as a major embarrassment for the Italian coaching legend, who has won domestic league titles with every club he has managed - AC Milan, Roma, Real Madrid and Juventus.

Turin prosecutor Raffaele Guariniello, in charge of the case, has previously investigated the involvement of Juventus officials Luciano Moggi and Antonio Giraudo during the 2004-06 period - and discovered irregular payments.

Capello heads an organisation named the Capello Family Trust, which is based in Guernsey.

This controls a group of companies, with investments and properties in Luxembourg, Switzerland, Ireland, Spain, France and Italy.

Capello's son Pier Filippo, who handles his father's business affairs, was eager to play down the significance of the investigation, pointing out that the vagaries of the Italian justice system have made it appear more sensational than it apparently is.

He told Gazzetta dello Sport: "It's only a tax assessment, which has arisen from controls of the budget of Juventus - an issue dating back to some time ago which is known to all.

"It's part of the modus operandi adopted up to now, to ascertain the earnings of high-profile individuals.

"One of the reasons for such dealings is that high-profile individuals, such as my father, often change residence for work reasons."

He was previously involved in a court case after being investigated by the attorney's office in Como, northern Italy.

Capello was found to have invented a fictitious property in the Swiss town Campione d'Italia, which enjoys beneficial tax status.

He escaped punishment by using plea bargaining, but his co-accused - town mayor Roberto Salmoiraghi - was sentenced to six months in jail.

However, Capello has assured the Football Association that his tax payments are in order. It appears the FA have known about the matter for some time and are confident nothing substantive will emerge.

"It is our understanding that the Italian tax authorities are currently following a procedure of looking into the finances of a number of high-profile individuals," said an FA spokesman.

"We have spoken to Fabio and his advisors about today's newspaper reports in Italy and they have explained the facts.

"They have also given us their assurances that Fabio Capello's tax payments are in order. The FA have no further comment to make on this subject."

The only worry for the FA is that the stigma of Capello's name being linked with such an inquiry will remain.

It is a story Soho Square chiefs could have done without, although it is unlikely to affect Capello's preparation for England's first match in charge, against Switzerland on February 6.