UK

Sunak asks ethics adviser to investigate tax affairs of Tory chair Nadhim Zahawi

Decision comes just hours after Zahawi said he would not stand down from his position

Nadhim Zahawi sought to end questions about his tax affairs by releasing a statement saying questions were raised about his tax affairs when he was being appointed chancellor. Photograph: Victoria Jones/PA
Nadhim Zahawi sought to end questions about his tax affairs by releasing a statement saying questions were raised about his tax affairs when he was being appointed chancellor. Photograph: Victoria Jones/PA
Mon Jan 23 2023 - 08:27

British prime minister Rishi Sunak said on Monday he had asked his independent ethics adviser to look into a tax case involving the chairman of his governing Conservative Party because there were “questions that need answering”.

Just hours after allies of Conservative chairman Nadhim Zahawi said he would not stand down over a dispute about his tax affairs, Mr Sunak said he wanted the ethics adviser to make sure Mr Zahawi had complied with the rules guiding ministers.

“Integrity and accountability is 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,” he said in a statement.

“I am pleased Nadhim Zahawi has agreed that approach and has agreed to fully co-operate with that investigation.”

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Mr Zahawi said he welcomed the move and looked forward to explaining the “facts of the issue”.

“I am confident I acted properly throughout,” he said in a statement, adding he would not discuss the issue further as the process moved forward.

In the three months since Mr Sunak was appointed prime minister, his government has been buffeted by questions over the probity of some of his lawmakers after he promised to lead the country with “integrity, professionalism and accountability”.

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Earlier, an ally of Mr Zahawi said: “He will not be standing down” after he had given details on how he settled a dispute with Britain’s tax authorities. They ruled that he had been “careless” with his declarations but had not, he said, deliberately made an error to pay less tax.

The opposition Labour Party said Mr Sunak, who became Britain’s third prime minister in as many months after his two predecessors were brought down first by scandal and then economic chaos, was too weak to sack Mr Zahawi.

“His position is totally untenable, and it shouldn’t be a case of we are sitting around waiting for him to resign, the prime minister should be sacking him,” Lucy Powell, a senior Labour lawmaker, told BBC News.

“Every day that passes just shows the weakness of the prime minister that he’s actually unable to sack Nadhim Zahawi.”

The case relates to Mr Zahawi’s co-founding of opinion polling firm YouGov in 2000. He said he had asked his father to help finance and support the launch, in exchange for a stake.

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He said when he was made minister for finance last year by former prime minister Boris Johnson, questions were raised about his tax affairs, prompting him to raise them with government officials and the tax office which disagreed with the number of shares given to his father.

“So that I could focus on my life as a public servant, I chose to settle the matter and pay what they said was due, which was the right thing to do,” he said in a statement released on Saturday.

He also said the tax office found he had not set up offshore tax arrangements but the statement did not address whether he paid a penalty to the tax office.

A tax policy website – Tax Policy Associates – has estimated that Mr Zahawi should have paid £3.7 million (€4.2 million) based on the capital gains tax incurred by the sale of tranches of shares in YouGov worth more than £20 million.

The Guardian newspaper has reported that tax authorities had imposed a 30 per cent penalty on top of the owed tax.

According to the government’s website, a penalty of 30 per cent could be paid when there was “lack of reasonable care” or where the error is considered to be deliberate.

Former Conservative Party leader Iain Duncan Smith said on Sunday Mr Zahawi should publish all information relating to the case and “get it all out now, whatever you have to do, and clear it up”. – Reuters