PMQs analysis: Taxing times for Sunak as he awaits Zahawi probe verdict

Nadhim Zahawi is facing calls to resign over the storm about his tax affairs  (PA Wire)
Nadhim Zahawi is facing calls to resign over the storm about his tax affairs (PA Wire)

How Rishi Sunak must want the inquiry into Nadhim Zahawi’s tax affairs to be done swiftly.

At Prime Minister’s Questions, he came under fire over the tax storm from Sir Keir Starmer and SNP Westminister Leader Stephen Flynn.

Both sought to drag Mr Sunak himself into the controversy.

A week ago at the Despatch Box, the PM was dismissing the row, saying Mr Zahawi had “addressed the matter in full”.

Now, he has ordered a probe into the matter by his ethics adviser Sir Laurie Magnus after it emerged Mr Zahawi allegedly paid a penalty to HMRC as part of a settlement, reportedly close to £4.8 billion in a dispute over the sale of shares in YouGov, a company he co-founded.

The details of the settlement, including the figure, have not been confirmed.

No10 says the inquiry will centre predominantly on whether Tory party chairman Mr Zahawi breached the ministerial code in the declarations he made, rather than the tax issues themselves.

It could, though, be extended by Sir Laurie to cover issues such as Mr Zahawi’s use of lawyers to deny to journalists any wrongdoing.

The former Chancellor is adamant that he has acted correctly in the matter, and has reportedly been making this case to fellow MPs.

Rishi Sunak in PMQs on Wednesday (Sky News)
Rishi Sunak in PMQs on Wednesday (Sky News)

He has also stressed that the taxman concluded that there had been a “careless and not deliberate’ error.

But Mr Sunak appears to believe that he was not told the full story over the affair when he made him party chairman.

“The usual appointments process was followed, no issues were raised with me when he was appointed to his current role, and since I commented on this matter last week, more information has come forward,” he told MPs on Wednesday.

“That is why I have asked the independent adviser to look into the matter.

“I obviously can’t prejudge the outcome of that but it is right that we fully investigate this matter and establish all the facts.”

Downing Street wants Sir Laurie to do the inquiry as quickly as possible while ensuring he has enough time to do it properly.

The row is not only a distraction to the Government’s agenda on delivering on key policies, it is also leaving the PM facing a string of difficult questions, especially given his pledge when he arrived in Downing Street that “integrity” would be at the heart of his Government.

Now, No10 is being hit by a barrage of questions including on whether Mr Sunak had ever paid a tax penalty himself.

His spokesperson batted off the question, stressing that tax matters are a confidential matter.

There is no suggestion the PM had ever had to pay such a fine, but it is still an awkward position for Mr Sunak to find himself in, and Downing Street may eventually change tack to be more open on this matter.

As the row gnaws into the premier’s political capital, Mr Zahawi is due to attend a meeting of the Cabinet on Thursday, which will discuss political issues during which he might be expected to play a prominent role.

Downing Street insisted the PM still had confidence in his party chairman, despite the fact that he had ordered the inquiry which suggested that that may now be lacking.

So, another awkward question to answer.

Mr Zahawi is a popular figure at Westminster, praised for his work as vaccine minister during the Covid pandemic.

He also has reportedly been very successful at raising funds for the Conservative Party, another reason why Mr Sunak may be reluctant to lose him.

But as the controversy shows no sign of dying down, many at Westminster expect Mr Zahawi to lose his job shortly.

It’s still possible that he may be cleared by Sir Laurie.

He might have told the Cabinet Office’s ethics team all that he should have done.

But whatever the outcome, Mr Sunak will want Sir Laurie’s findings to be delivered in a timely fashion, especially with the May local elections already appearing on the horizon.