More controversy has come the way of the Tory’s with Party Chairman Nadhim Zahawi facing calls for his resignation, after his tax affairs were thrust into the public domain. It has emerged that the former chancellor paid a significant penalty, which it is understood took a total settlement to just under £5 million, owed to HM Revenue and Customs (HMRC), whilst in the position of head of His Majesty’s Treasury.  

Prime Minister Rishi Sunak has asked his independent ethics adviser to carry out an investigation, saying that there were questions that needed to be answered; in particular, whether or not there has been a breach of ministerial code. Meanwhile, Labour leader Sir Keir Starmer and Scotland’s First Minister, Nicola Sturgeon have both called for Mr Zahawi to be sacked, calling his position “untenable”.

Mr Zahawi insists that his tax affairs were up to date by the time he was appointed chairman of the Conservatives, back in October 2022, but has admitted that the “error” was “careless, but not deliberate.” 

Code breaker? 

The investigation into Mr Zahawi will look specifically at whether he broke the ministerial code in his tax settlement to HMRC, paid while he was chancellor.  The “code” in question is basically a document which sets out what is expected of government ministers and the “rules” they should abide by.

The company who have been thrust into the spotlight is Balshore Investments, which is registered offshore in Gibraltar. Mr Zahawi has faced questions over whether he tried to avoid paying UK tax by using Balshore to hold shares in YouGov, which is the company he co-founded back in 2000. 

Penalty payment

It is being suggested that the Party Chairman had to pay back tax that he owed, with a 30% penalty on top, bringing the total £4.8m, a figure not verified, but equally not denied when put to the former chancellor’s spokesperson.

Chairman confident of action

Mr Zahawi  has said that he welcomes the matter being referred by the PM to the independent adviser, Sir Laurie Magnus and his team, and looked forward to explaining the facts of this issue to them. “I am confident that I acted properly throughout and look forward to answering any and all specific questions in a formal setting,” was the minister’s formal line. He insists that around the time of his appointment as chancellor, he discussed his taxes with Cabinet Office.

Aware of responsibilities

Expanding a little on the situation, Mr Zahawi said he fully appreciated that as a senior politician, he knew that scrutiny and propriety were important parts of public life. He went on to explain: “Twenty-two years ago I co-founded a company called YouGov, and I am incredibly proud of what we have achieved.”

Describing it as an amazing business which has employed thousands of people and continues to provide a world-beating service, he admitted that when it was set up, he possessed neither the money or the expertise to go it alone. As a result he accepted help from his father who took founder shares in the business, in exchange for some capital and his “invaluable guidance”.

Bringing the story almost back to the present, he said: “Twenty one years later, and following discussions with HMRC, they agreed that my father was entitled to founder shares, but disagreed about the exact allocation.” In summery, he announced that they concluded that this was a “careless and not deliberate” error and as a consequence and so that he could focus on his life as a public servant, he chose to settle the matter and pay what he had been told was due, “which was the right thing to do,” he stated.

PM explains his position

Prime Minister, Rishi Sunak confirmed that he had asked for an investigation by his independent ethics advisor to get to the bottom of everything, and had spoken with Mr Zahawi who he said would remain Party chairman throughout the enquiry and had agreed to “fully cooperate”. He continued: “Integrity and accountability are really important to me, so we need to establish all the facts.”

Transparency

The deputy prime minister, Dominic Raab was keen to clarify that Mr Zahawi had been transparent that all of his taxes owed to HMRC are up to date and paid in full, adding that “If he needs to answer any further questions I am sure he will do so.”

Opposition in “untenable” claim

Unsurprisingly, there were loud calls for Mr Zahawi’s removal coming from the opposition benches.

The term untenable has often been thrown at conservatives in relation to their positions in office, and this was no different.

Sir Kier Starmer added that the PM’s leadership and judgement had to be called into question. Nicola Sturgeon commenting on the hefty size of the tax-bill settlement, said that if it was the case that while he was chancellor he settled a seven-figure bill with HMRC, included a very significant penalty, it had to mean that there must have been something untoward about his tax affairs to a very large tune. Both used “untenable” to describe where they believed the situation left Mr Zahawi’s position.

Calls for PM to step up

Labour’s deputy leader Angela Rayner was another to throw in the “untenable” reference, adding that she believed it was time for the PM to “put his money where his mouth is” and dismiss Mr Zahawi, as she felt it was his responsibility to “decontaminate his scandal-ridden cabinet by setting out clearly what steps he has taken to ensure that all ministers’ tax affairs are in order.” She continued: “The fact that Nadhim has not been out on the airwaves explaining himself, to me adds insult to injury.”

Child refugee

Nadhim Zahawi is a child refugee, having fled Iraq with his parents in the 1970’s. He has been the Conservative MP for Stratford-on-Avon since 2010 and is believed to be one of the richest politicians in the House of Commons.

He has been education secretary, vaccines minister during the pandemic, and briefly chancellor. He was appointed Conservative Party chairman and minister without portfolio, attending cabinet, in October last year.

Vote of confidence?

He may be a little concerned right now, despite Mr Sunak standing by him for the time being with a dreaded vote of confidence, but upon the findings of the investigation, the PM has absolute authority when it comes to determining if the ministerial code has been broken.