The allegations centre on events in 2014 when Gino Pozzo assumed sole ownership of the club from his father Giampaolo Pozzo, and was required to demonstrate he had sufficient funds to take full control.

A spokesman from the English Football League (EFL), which represents premier league clubs, said: ‘We can confirm, following receipt of information from The Daily Telegraph, that we immediately commenced a disciplinary investigation into serious allegations made against Watford Football Club.

‘The club has been formally contacted by the EFL and is now required to provide a full and detailed response to the allegations. Once that response is received, it will be fully considered by the EFL and appropriate action will be taken under our rules and regulations.’

At the time of the alleged offence, Watford was in the Championship, so potential penalties could include a substantial fine, a points deduction, or even expulsion.

A spokesman for Watford football club said: ‘There are two ongoing investigations. It would be inappropriate to comment further until those investigations reach completion.’

There is nothing to indicate Pozzo himself had any knowledge that a forged HSBC letter had been obtained or submitted on his behalf, with the newspaper suggesting a third party was involved in the financial negotiations at the time.

The allegations centre on a forged bank letter claiming that the investment group taking over control at Watford FC had access to ‘a cash-backed unsecured bank guarantee up to the amount of £7m’ for funding the club in the 2014-15 season.