Sunak ‘unaware’ of Zahawi’s £1m tax penalty

Prime Minister promises independent investigation into Tory party chairman’s dealings with HMRC

RISHI SUNAK has insisted he did not know Nadhim Zahawi had recently agreed to pay a million-pound penalty to the taxman when he made him the new Conservative Party chairman.

The Prime Minister issued his first public criticism of Mr Zahawi over the matter yesterday, saying “there are questions that need answering” and asking his ethics adviser to investigate. A week earlier, Mr Sunak had defended Mr Zahawi in the House of Commons while Downing Street advisers insisted that the Prime Minister “takes Nadhim Zahawi at his word”.

The developments raised fresh questions about why Mr Sunak was unaware of the facts when he appointed Mr Zahawi and why he defended his colleague so robustly last week.

Mr Zahawi has admitted paying a penalty to the taxman over the way in which shares in the polling company Yougov, that he helped found, were divided up and taxed.

Reports that he agreed to pay HMRC around £5million, including around £1million as a penalty, have not been denied by Mr Zahawi’s press team. He has said he discussed the HMRC issue with the Cabinet Office when he was appointed to succeed Mr Sunak as chancellor by Boris Johnson in July and that he settled the matter later while still at the Treasury.

It is unclear why Mr Sunak, who made Mr Zahawi party chairman in September, was not told about the penalty before doing so. The Cabinet Office flags issues of concern about proposed ministers during reshuffles.

A Whitehall insider said the Cabinet Office’s propriety and ethics team is not given details of disputes between HMRC and individual MPS, meaning the specifics may not have been known.

Pressed on whether Mr Sunak knew when appointing Mr Zahawi that he had paid a penalty to HMRC, the Prime Minister’s official spokesman said: “That’s not my understanding.”

The matter will now be looked at by Sir Laurie Magnus, the new independent adviser on ministers’ interests. No further details were published yesterday about the remit of his investigation, nor was any timescale given, meaning his inquiries could drag on for months before conclusions are reached.

Despite having the word “independent” in his title, Sir Laurie was selected by Mr Sunak and any recommendations he makes will need to be approved and enacted by the Prime Minister.

Mr Sunak said: “Integrity and accountability are really important to me, including in this case. There are questions that need answering and that is why I have 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.”

Mr Zahawi said: “I welcome the Prime Minister’s referral of this matter to the independent adviser.

“I am confident I acted properly throughout and look forward to answering any and all specific questions in a formal setting to Sir Laurie.”

Angela Rayner, Labour’s deputy leader, told MPS: “No10, apparently, still doesn’t know if other ministers are in dispute over their own taxes. So what is the Prime Minister doing about it?”