>> There's no two ways about it because had the referee spotted it then the penalty would of and should of been given in the first place
That's one view (and, since I don't know for sure, I'll say "is quite likely" the way, in fact that the currently laws of the game apply).
However, from a perspective of equity... there's another view, which is this. An infraction occurred and a penalty should have been awarded - that is to say, punishment for the offending side is deserved. How then, is it at all fair, if the offending side actually benefits from the non-call?
In American Football, such situations are handled by giving the damaged side a choice - you may choose to accept the penalty or instead may choose to let the subsequent play stand.
So long as VAR is going to lag, then I think it fair (perhaps controversial) to institute a "your choice to accept the penalty or to accept subsequent play" rule.
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My proposed "solution" is of course flawed - what needs to be fixed is the huge delay between when an offsides/penalty occurs and when VAR finally pulls back the play.
American Football has an advantage though in that the game goes through 'plays' and stops frequently giving a natural time for VAR to look at things.
Football here though is only made exciting by the fact that it constantly flows which is why any stoppage frustrates people.
I was there at city last year when we played Spurs and Sterling scored the last minute winner. I ran up and down the steps, hugged the fella next to me and then the goal was chalked off for offside.
I've never felt so drained in the 30 years I have watched city. The decision was correct of course but now the excitement of those moments just won't be the same.
Imagine the Aguero 2011 moment in 5 years time, we'd score and then have to stand around waiting for the refs to consider whether there was a foul on a QPR player 2 minutes before.
Personally I'd just give VAR to the refs to use as a tool. They can call upon it when they aren't sure but the rest of the time the decision stands once it's made.