HMRC urged to reveal all on Zahawi taxes

Ex-chancellor tight-lipped about whether he paid a penalty after reportedly handing over millions

HMRC is under pressure to reveal whether Nadhim Zahawi paid a penalty to the taxman after he reportedly agreed to hand over millions of pounds. The Tory Chairman’s spokesman has not denied reports at the weekend that Mr Zahawi accepted the need for a tax payment after scrutiny of his family’s financial affairs. Angela Rayner, the Labour deputy leader, has written to HMRC seeking clarity on what took place by asking a dozen questions.

HMRC is under pressure to reveal whether Nadhim Zahawi paid a penalty to the taxman after he reportedly agreed to hand over millions of pounds.

The Tory chairman’s spokesman has not denied reports at the weekend that Mr Zahawi accepted the need for a tax payment after scrutiny of his family’s financial affairs.

Angela Rayner, the Labour deputy leader, has written to HMRC seeking clarity on what took place by asking a dozen questions. A copy of the letter has been seen by The Daily Telegraph.

Many of the questions relate to whether a financial penalty was incurred by Mr Zahawi. Ms Rayner also asked when HMRC first communicated with Mr Zahawi about tax issues.

Penalties can be incurred for a variety of reasons over tax, according to HMRC guidance, including if there was a “lack of reasonable care” or a “deliberate and concealed” error. According to the rules, in some cases, people can be made to pay up to 100 per cent of the tax owed in a penalty, effectively doubling the bill owed to the taxman.

Ms Rayner said: “It is manifestly in the public interest for HMRC to explain the nature of this payment and whether the man who just months ago was in charge of the nation’s finances and HMRC itself has admitted fault or incurred financial penalties as part of his settlement.

“Ordinary British taxpayers would incur financial penalties if they had displayed a lack of reasonable care that deprived the public purse of significant revenue and urgent clarity is needed in this case if the growing suspicion of double standards or preferential treatment is to be avoided.”

A spokesman for Mr Zahawi declined to comment specifically on whether he had paid a penalty over his tax affairs, instead issuing a wider remark speaking to the situation.

The spokesman said: “Mr Zahawi’s tax affairs were and are fully up to date and paid in the UK. Neither he nor his direct family are beneficiaries of Balshore Investments or any trust associated with it. Mr Zahawi has always said that he will answer any questions from HMRC, which he has always done.”

The issue of Mr Zahawi’s taxes made headlines in the summer when he was one of the candidates for the Conservative Party leadership to succeed Boris Johnson.

Mr Zahawi’s camp issued denials to various reports that his financial affairs had been looked into by HMRC, the Serious Fraud Office and the National Crime Agency. After the stories

‘Answers are needed if the suspicion of double standards or preferential treatment is to be avoided’

emerged, Mr Zahawi promised to publish his tax returns if he won the Tory leadership. He dropped out of the race days later. His tax returns remain unpublished.

Mr Zahawi helped set up the polling company Yougov. His family trust, Gibraltar-registered Balshore Investments, held a stake in the firm, according to Companies House records.

It is unclear when Mr Zahawi agreed to pay millions of pounds in tax, as reported by The Sun on Sunday; specifically, whether it came before or after his Tory leadership bid.

During the summer, Mr Zahawi was chancellor, taking over from Rishi Sunak when he resigned in July and remaining in post until Mr Johnson left Downing Street in September.

An HMRC spokesman said they could not comment on identifiable taxpayers due to strict confidentiality rules.