There are “questions that need answering”, Rishi Sunak has insisted today, as he confirmed that his independent ethics adviser will look into the seven-figure penalty paid by Conservative Party chairman, Nadhim Zahawi, during a dispute with tax authorities.
“I’ve asked our independent adviser to get to the bottom of everything, to investigate the matter fully and establish all the facts and provide advice to me on Nadhim Zahawi’s compliance with the ministerial code,” said the PM.
Despite having a PM who has vowed to restore “integrity, professionalism and accountability at every level” to the Conservative party, the Tories are being hit by fresh allegations of sleaze and corruption – this time in light of revelations that during Zahawi’s short stint as chancellor, he paid a fine to HMRC to resolve a tax dispute with them over his family’s financial affairs.
Zahawi has welcomed Sunak’s decision to ask the No 10 ethics adviser to investigate his case, declaring: “I am confident I acted properly throughout.” He has also said that HMRC concluded the error he paid a penalty for was “careless and not deliberate.”
But we’re not talking about a small error. While Zahawi hasn’t disclosed the size of the settlement, tax experts estimate that the total amount he failed to hand over to the taxman when it was due was likely to be £4.8m.
And the fact that this occurred at a time when Zahawi was the effective boss of HMRC is terrible optics for the government.
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The tax case involves his links to Gibraltar-based trust Balshore Investments Limited, of which his father is a director. Before his days in politics, Zahawi – who is thought to be worth more than £100m – rose to prominence as one of the co-founders of leading polling company YouGov. When Zahawi co-founded YouGov in May 2020, the Balshore trust was allocated shares in the company.
This isn’t the first time that the millionaire Stratford-upon-Avon MP has been in the spotlight over his financial affairs. In the past, he has been scrutinised over his decision to purchase his £1m home via a tax-haven based firm, and in 2013, he was forced to apologise after it emerged that he had claimed almost £6,000 of public money to heat the stables at his country home.
Are Zahawi’s days numbered? His allies insist that he has no intention of resigning and Sunak has been clear today that Zahawi, who has agreed to “fully cooperate”, will remain Tory Party chairman during the investigation.
However, Conservative MP Peter Aldous has questioned on Times Radio whether someone who is so careless about their taxes should “ever have been appointed chancellor.” There should be no situation in which someone in this role is “negotiating a settlement with HMRC,” insisted Aldous.
If Sunak truly wants to rid his party of sleaze allegations, some are suggesting that he should ask all of his ministers to publish their tax returns as a matter of course. Though it’s worth adding, Sunak could start by publishing his own (we are still waiting for the PM to do so, despite his pledge to publish them by Christmas…)
Another question that needs answering: Does Zahawi now consider he had an interest in the Gibraltar firm Balshore Investments where these YouGov shares were held? If so, why was it not declared on the parliamentary register of interests?
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