The row surrounding Zahawi centres on a tax bill over the sale of shares in YouGov – the polling firm he founded – worth an estimated £27 million and which were held by Balshore Investments…reports Asian Lite News
Nadhim Zahawi has authorised HM Revenue & Customs to pass details of his tax affairs to the Prime Minister’s ethics adviser – who is investigating if he broke the rules for ministers – as Rishi Sunak continued to resist calls to sack him.
Pressure on the Tory Party chairman, who has admitted paying a penalty as part of an estimated £4.8 million settlement with HMRC, intensified after the head of the organisation said such penalties were not issued for “innocent errors”.
A source close to Zahawi said that he has now given HMRC permission to speak to Sir Laurie Magnus who is investigating whether his actions represented a breach of the Ministerial Code of Conduct.
Earlier, giving evidence to MPs, the head of HMRC Jim Harra said that while he could not comment on individual cases there were “no penalties for innocent errors in your tax affairs”.
Speaking during a Cabinet away day at Chequers Sunak said he would wait for Sir Laurie’s report before making any decisions while refusing to be drawn on when he had learned his minister had paid the reportedly 30% penalty.
Asked why Harra’s comments were not evidence enough to sack Zahawi, the Prime Minister told broadcasters: “I’m not going to pre-judge the outcome of the investigation, it’s important that the independent adviser is able to do his work. That’s what he’s currently doing, that’s what I’ve asked him to do and I’ll await the findings of that investigation.”
A week ago, Sunak told Prime Minister’s Questions that Zahawi had addressed the fiasco “in full”.
But he went on to launch an investigation by Sir Laurie, his independent adviser on ministers’ interests, admitting there were “questions that need answering”, after the Guardian revealed Zahawi had paid a penalty.
Sunak insisted that “no issues were raised with me” when he appointed Zahawi to his current role, amid questions over his political judgment.
Earlier in the day, Harra was pressed on questions surrounding the minister’s tax dispute while appearing before MPs on the Public Accounts Committee.
Harra was at pains to stress that he could not comment on individual cases, but added: “Carelessness is a concept in tax law.
“It can be relevant to how many back years that we can assess, can be relevant to whether someone is liable to a penalty and, if so, what penalty they will be liable to for an error in their tax affairs. So if you take reasonable care, but nevertheless make a mistake, whilst you will be liable for the tax and for interest if it’s paid late, you would not be liable for a penalty. But if your error was as a result of carelessness, then legislation says that a penalty could apply in those circumstances.”
The row surrounding Zahawi centres on a tax bill over the sale of shares in YouGov – the polling firm he founded – worth an estimated £27 million and which were held by Balshore Investments, a company registered offshore in Gibraltar and linked to Zahawi’s family.
Zahawi has said that HMRC concluded there had been a “careless and not deliberate” error in the way the founders’ shares, which he had allocated to his father, had been treated. He also insisted he was “confident” he had “acted properly throughout”.
Pressed on the case, Harra also suggested there could be certain specific circumstances in which he could appear before the committee to discuss some details of a minister’s tax affairs, as he said he would aid the ethics inquiry into Mr Zahawi in any way he could.
“It would not be normal for me to account to this committee for a person’s tax affairs, but if there are general issues about how we manage tax and I’ve got the ability to be disclosive, that’s obviously something I would take advantage of,” he said.
“If we are asked by the independent adviser on ministerial interests to help with the inquiry, we will do so in any way we possibly can.”
But he also indicated that Zahawi would need to grant his consent as part of such a process due to the confidential nature of an individual’s tax affairs.
Downing Street said Sunak “expects participation” with the inquiry.
The HMRC boss distanced tax officials from any involvement in the appointment of ministers, amid questions about the Cabinet Office process for prospective officeholders.
Harra told MPs that HMRC was not routinely contacted by the Cabinet Office or Downing Street regarding ministerial appointments.