Everton have resolved the long-running dispute with Watford over hiring Marco Silva as their manager after agreeing to pay compensation understood to be about £4 million.

The deal will head off the need for a full independent QC-led inquiry being launched by the Premier League, with the organisation having insisted that it wanted the issue sorted out.

Watford made a formal complaint to the Premier League last year, alleging Silva had been “tapped up” by Everton. The league employed a law firm to interview all the parties involved to establish what should happen next, in the hope that a resolution would be reached.

The range of possible sanctions, if the case had gone to an inquiry and it found against Everton, included a points deduction, but the hope was always that it would be settled through a financial arrangement. That has now happened.

Watford were left furious by Everton’s attempts to bring in Silva in November 2017, following the sacking of Ronald Koeman. Watford had started the season strongly under Silva, who had arrived in the summer on a two-year deal from Hull City, and were in the top four after eight matches.

Everton targeted Silva as Koeman’s replacement but Watford rejected their approach, turning down up to £10 million in compensation for the Portuguese, who did not have a break clause in his contract.

Silva received a predictably frosty welcome from the Watford fans during Everton's recent defeat at Vicarage Road credit: GETTY IMAGES

Silva wanted to go but was adamant that he was not distracted by Everton’s interest. He continued to focus on his job at Watford and did not act improperly. Everton also insisted they did not make an illegal approach for Silva.

In the event, Watford’s form deteriorated to such an extent that Silva was sacked on Jan 21 after a run of one win in 11 matches, with the club just five points above the relegation zone.

Watford clearly pinned the blame for their collapse on Everton’s interest and the disruption it caused. “The catalyst for this decision is that unwarranted approach, something which the board believes has seen a significant deterioration in focus and results to the point where the long-term future of Watford FC has been jeopardised,” the club said in a strongly-worded statement when Silva was dismissed.

Everton turned to Sam Allardyce as manager, who was then sacked at the end of last season, with Silva taking over on a three-year contract.

In July, Watford released a statement insisting that their case against Everton was less about receiving financial compensation than making a stand over what they believed to be a clear breach of rules on alleged “tapping up” with damaging consequences.

It has now been agreed that there is no need for a full inquiry to take place, much to the relief of the Premier League, which had hoped the matter would have been dealt with as part of Watford’s sale of Brazilian forward Richarlison for £40 million to Everton last summer. But that did not happen.

Richarlison followed Silva from Watford to Merseyside for a fee of £40m credit: GETTY IMAGES

At that time the clubs never came close to any agreement and so the case was placed in the hands of lawyers appointed by the Premier League to examine the evidence and basis for any charge.

Watford replaced Silva with Javi Gracia and are eighth in the Premier League, four points ahead of Everton, with the Spaniard having been rewarded with an extended contract for the impressive job he has done.

Life has not gone so smoothly for Silva, who has been under increasing pressure after a disappointing run of form. Nine defeats in 13 matches included a loss at Watford in the club’s most recent Premier League game.

Silva received a hostile reception at Vicarage Road during that match because of the circumstances under which he wanted to leave Watford.

Despite the run of form, it is understood that Silva retains the backing of the Everton hierarchy, led by majority shareholder Farhad Moshiri. However, Everton have a tricky run of home games to come, with Liverpool, Chelsea, Arsenal and Manchester United the next four teams to visit Goodison Park.