Zahawi faces call to quit over claim of £1m HMRC fine
Tory chairman’s career in jeopardy amid failure to deny allegations of huge penalty levied by HMRC
NADHIM ZAHAWI is alleged to have paid a penalty of more than £1million to HMRC over his tax affairs – a claim that left him fighting for his political future last night.
The deputy leaders of both Labour and the Liberal Democrats have questioned whether the Tory chairman should stay in post in the wake of the latest allegation against him while Conservative MPS have also privately called for him to explain.
One told The Daily Telegraph it was time to “put this to bed once and for all”.
The claim that Mr Zahawi agreed to pay the £1million-plus penalty to the taxman, first reported by The Guardian, was not denied by the former chancellor’s press team last night.
A Sun on Sunday report that Mr Zahawi had agreed to pay millions of pounds to HMRC after scrutiny over his family’s tax affairs has also not been denied. However, allies of Mr Zahawi last night insisted he would not resign over a careless error.
Penalties can be required by the taxman for a variety of reasons including when a “lack of reasonable care” with tax payments has been taken, according to HMRC guidance online.
Angela Rayner, Labour’s deputy leader, said: “Rishi Sunak promised a Government of integrity, professionalism and accountability but instead he’s propping up a motley crew of scandalridden ministers.
“Nadhim Zahawi’s story doesn’t add up. The position of the man who was, until recently, in charge of the UK’S tax system and who this Prime Minister appointed Conservative party chair is now untenable,” she said.
“It’s time for Rishi Sunak to put his money where his mouth is and dismiss Nadhim Zahawi from his Cabinet.”
Mr Zahawi has faced questions since last summer about why shares from Yougov, the polling firm he helped set up, were kept in Balshore Investments, a Gibraltar-registered family trust.
Mr Zahawi and his press spokesman have previously rejected criticism of his tax arrangements, saying he has always paid tax he owed. Allies have also insisted he did not set up the offshore arrangement.
A statement, issued by Mr Zahawi’s spokesman earlier this week, stated: “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 latest reports coincide with the approach of the deadline for self-assessment tax returns, which need to be submitted to HMRC. They also overlap with an emerging battle inside the Tory party over tax, with some backbenchers pushing for cuts but the Treasury insisting reducing inflation is the priority.
Experts have estimated the capital gains tax incurred by the sale of multiple tranches of shares in Yougov by Balshore Investments was about £3.7 million. The Guardian reported that Mr Zahawi had agreed to pay a penalty of about 30 per cent of that amount, which was about £1.1 million, in a settlement reached late last year.
Questions about the tax affairs first surfaced in the summer when Mr Zahawi was chancellor and was also running in the Tory leadership contest.
He was moved from the Treasury to head up the party headquarters by Mr Sunak in September. Tory chairman is a cabinet-level position which involves helping oversee party funding.
Mr Zahawi, the MP for Stratford-on-avon, was seen going into Downing Street yesterday, but No10 insiders rejected speculation it was for a meeting over his position. A Downing Street source said Mr Zahawi did not meet Mr Sunak or discuss the tax situation.
Some Conservative MPS who talked to The Telegraph yesterday urged Mr Zahawi to provide more information. One said: “I think at some point he’s going to have to explain it .. he is the party chairman and the party chairman’s the person who is meant to go out and who fronts up all the difficult stuff. He’s not going to be able to hide from the media forever.”
Another Tory MP said: “He just needs to make this go away and be open and transparent.” Sir Alistair Graham, former chairman of the parliamentary committee on standards in public life, said: “This is an obvious case for the new ministerial adviser [on ethics] to investigate.”
Daisy Cooper, Lib Dem deputy leader, said: “The public deserves to know the substance behind these allegations.”
‘The position of the man who was, until recently, in charge of the UK’S tax system is now untenable’