Pressure mounts on Zahawi to clear up questions on tax affairs

Conservative party chair Nadhim Zahawi came under increasing pressure on Sunday to provide more information about the tax settlement he reached with HM Revenue & Customs.

Former Tory leader Sir Iain Duncan Smith said Zahawi should issue “the absolute facts”, as some Conservative MPs questioned whether he could survive as a minister in Rishi Sunak’s cabinet.

Amid claims that Zahawi has tried to avoid paying tax, Labour said prime minister Rishi Sunak should “come clean” about what he knew and when.

On Saturday Zahawi disclosed that he had reached a settlement with HMRC following a “careless and not deliberate error” in relation to the tax treatment of shares in YouGov, the polling company he co-founded.

He said in a statement that he had paid what HMRC stated “was due”, but declined to say how much that was, or whether there was a penalty.

Zahawi also did not clarify whether he reached the agreement with HMRC while he was chancellor, and was therefore the minister in charge of the department.

Several Conservatives said they regarded Zahawi as having outstanding questions to answer.

Duncan Smith told the BBC that Zahawi should “get it all out now” and “clear it up”, although he added he did not believe his colleague had been deceitful.

A former Tory minister said colleagues were “quite worried” about Zahawi, adding the questions surrounding him were “damaging” for the party.

A second former Conservative minister expressed doubts Zahawi would survive as Tory chair, saying he was “screwed”.

Another Tory MP also questioned whether Zahawi could remain in his post.

The Sun newspaper on Sunday reported that Cabinet Office officials blocked plans to offer Zahawi a knighthood in the new year’s honours list after civil servants raised questions about his tax affairs.

Labour has called for Daniel Greenberg, parliamentary commissioner for standards, to investigate Zahawi.

Labour deputy leader Angela Rayner said Zahawi’s statement on Saturday suggested he was chancellor while HMRC was investigating him and he reached a settlement with the department.

Repeating Labour’s call for Sunak to sack Zahawi, Rayner added: “The prime minister must now come clean on what he knew and when about Nadhim Zahawi’s tax affairs.”

Zahawi has faced scrutiny over a 42.5 per cent stake in YouGov that was held by Balshore Investments, a Gibraltar-based vehicle owned by the Conservative chair’s father.

It emerged last year that HMRC was investigating whether Zahawi should have paid UK capital gains tax after the sell down of Balshore’s stake in YouGov.

Dan Neidle, a tax expert, has estimated that £3.7mn of tax would have been payable on the stake if it was regarded as belonging to Zahawi.

Zahawi said in his statement on Saturday that his father had been given “founder shares” in YouGov in return for advice and some capital, but that HMRC disagreed about the exact allocation. “They concluded that this was a ‘careless and not deliberate error’.” he added.

Zahawi acknowledged making a payment to HMRC, but gave no details of its size, or whether, as the Guardian reported on Friday, he also incurred a penalty that took the settlement to about £5mn.

He said he had discussed his tax affairs with the Cabinet Office at the time he was appointed chancellor in July 2022.

A spokeswoman for Zahawi on Sunday declined to add to Saturday’s statement.

Foreign secretary James Cleverly on Sunday offered only limited support for Zahawi, saying on the BBC and Sky News that he knew nothing beyond what had been in the Tory chair’s statement.

Downing Street declined to comment. The Cabinet Office said it would not comment on private discussions between any minister and officials.

This post was originally published on Financial Times

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