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The source said the investigation had been going on for around a year and involved whether Capello should have been paying Italian taxes on money, earned from sponsors, which the coach was holding in Luxembourg.

Investigators have been looking at documents from the time Capello was coach of Roma between 1999 and 2004 and Juventus between 2004 and 2006.

The English FA issued a statement saying: "It is our understanding that the Italian tax authorities are currently following a procedure of looking into the finances of numerous high-profile individuals, especially in sport.

"We have spoken to Fabio and his advisors about the newspaper reports in Italy. They have explained the facts. They have also given their assurances that Fabio's tax payments are in order. The FA has no further comment to make."

Several top Italian sports personalities have been investigated by tax authorities including former MotoGP world champion Valentino Rossi, who was probed because he was based in Britain while also spending a significant amount of time in Italy.

Capello was appointed England coach in December having won domestic titles with all four of the clubs he managed -- AC Milan, Real Madrid, Roma and Juventus.

The 61-year-old's last job was as boss of Real Madrid for a second time, where he was sacked last June despite helping the club to the championship.

As well as living in Spain for a time, he has a home north of Milan and also owns a house in Switzerland.

Eurosport