Labour says questions remain unanswered over Nadhim Zahawi tax dispute claims

Rishi Sunak is facing calls to launch an inquiry into whether Nadhim Zahawi broke the ministerial code, amid allegations he paid millions to settle a dispute over his tax.

The Prime Minister defended the Conservative Party chairman in the Commons on Wednesday, saying he had addressed the matter in full after claims he stumped up a seven-figure sum to settle a dispute with HMRC.

Mr Sunak has full confidence in the MP having taken him “at his word” over the allegations, the Prime Minister’s press secretary said.

Questions have swirled around Mr Zahawi since the Sun on Sunday revealed the tax dispute.

He allegedly avoided tax by using an offshore company registered in Gibraltar to hold shares in the polling company he co-founded, YouGov.

But Labour, in a letter to Mr Sunak, said questions remain unanswered by the Cabinet minister as the party urged Mr Zahawi to “come clean” about his tax affairs.

In the letter, Labour Party chair Anneliese Dodds posed a series of questions to the Prime Minister including whether there is a “VIP fast lane” for Government ministers to settle tax disputes with HMRC.

She also asked the Prime Minister what due diligence was carried out on Mr Zahawi before his appointment as Conservative chair.

“If answers to these questions have not been provided, can you confirm that a full Cabinet Inquiry will take place to determine if Mr Zahawi has misled the British public and broken the Ministerial Code? And if that inquiry finds that he did, will you remove him from post immediately?

“I’m sure you will agree that public confidence in politicians is at an all-time low. It is dependent on all of us in public life to uphold the highest standards of probity. We have a duty to restore that trust and to ensure that the British public can have confidence in those who create their laws,” Ms Dodds wrote to the PM.

Prime Minister’s Questions
Prime Minister Rishi Sunak was questioned about Nadhim Zahawi’s tax affairs (Stefan Rousseau/PA)

Mr Sunak was dragged into the row at Prime Minister’s Questions when Labour MP Alex Sobel raised the issue.

Mr Sobel said Mr Zahawi was “forced to pay millions to HMRC to settle a tax dispute” and asked Mr Sunak if he was “aware of an investigation when he appointed him to his Cabinet and as chairman of the Conservative Party”.

He added: “Will the Prime Minister demand accountability from his Cabinet members about their tax affairs?”

The Prime Minister said Mr Zahawi “has already addressed this matter in full and there’s nothing more that I can add”.

Mr Sunak’s press secretary said Mr Zahawi “has spoken and been transparent with HMRC”.

On whether Mr Sunak believes the matter is now closed, she said: “I don’t know whether the Prime Minister has reviewed it in full, but I do know that he takes Nadhim Zahawi at his word.”

Asked if Mr Sunak is confident he knows everything he needs to know, she responded “yes”, giving the same answer when asked whether the Prime Minister has full confidence in Mr Zahawi.

Home Office minister Robert Jenrick said it was a “private matter” for Mr Zahawi adding the “important factor” is that Mr Zahawi’s tax affairs are now up to date.

“I think it’s very important that any minister maintains their tax affairs appropriately,” Mr Jenrick told LBC radio.

“The bar is obviously higher as a Treasury minister but I’ve seen no evidence to suggest there has been any inappropriate behaviour by Mr Zahawi so I’d be careful about making allegations without the facts.”

Nadhim Zahawi
Mr Zahawi briefly served as chancellor (Kirsty O’Connor/PA)

A spokesman for Mr Zahawi has said his taxes are “properly declared” and he “has never had to instruct any lawyers to deal with HMRC on his behalf”.

“As he has previously stated, Mr Zahawi’s taxes are properly declared and paid in the UK,” the spokesman said.

“He is proud to have built a British business that has become successful around the world.”

YouGov’s 2009 annual report showed a more than 10% shareholding by the Gibraltar-registered Balshore Investments Ltd.

The report described the company as the “family trust of Nadhim Zahawi”, then an executive director of the polling firm.

Thangam Debbonaire, the shadow leader of the House of Commons, said it would be in Mr Zahawi’s own interest to answer any outstanding questions about his tax affairs.

“I think it’s in Nadhim Zahawi’s own interest to answer the question so there doesn’t need to be a Cabinet Office inquiry,” she told BBC Newsnight.

“But if he doesn’t, there should be.”