‘Taxes Are Private Matters,’ Foreign Secretary Says Over Nadhim Zahawi ‘Error’

Minister without Portfolio and Conservative Party Chair Nadhim Zahawi.
Minister without Portfolio and Conservative Party Chair Nadhim Zahawi.

Minister without Portfolio and Conservative Party Chair Nadhim Zahawi.

James Cleverly has insisted that tax affairs are “private matters” during a grilling over the finances of the Tory party chairman.

The foreign secretary stressed that Nadhim Zahawi made a “careless error” after it was revealed he paid a settlement to HM Revenue & Customs in relation to a shareholding in YouGov.

Zahawi is under pressure over allegations that he tried to avoid tax and has now had to pay it back as part of a multi-million pound settlement.

Cleverly said he did not know the size of the tax settlement with HMRC or whether Zahawi paid a penalty.

“I don’t know more than is in his statement,” Cleverly said.

Pressed on whether Zahawi should reveal more information, Cleverly said: “People’s taxes are private matters. I know that as politicians we, quite rightly, are expected to have a higher level of disclosure than perhaps other people might do.

“Nadhim has issued a statement where he has admitted that he made a careless error, that this is now resolved.”

Cleverly also swerved questions over whether Zahawi negotiated his tax settlement while he was chancellor, or what Rishi Sunak knew when he appointed him party chairman.

“I’m not an investigator,” he added when it was put to him that he was there to speak on behalf of the government.

Asked whether Zahawi will survive in his role until Wednesday, Cleverly said: “What else am I going to say other than yes, because he’s a very, very effective minister.”

Foreign Secretary James Cleverly faced a grilling
Foreign Secretary James Cleverly faced a grilling

Foreign Secretary James Cleverly faced a grilling

Zahawi, who attends Sunak’s Cabinet, released a statement to “address some of the confusion about my finances”.

However, the statement raised further questions, including whether Zahawi negotiated the settlement when he was chancellor and in charge of the country’s taxation.

Claims started emerging when Zahawi was made chancellor by Boris Johnson last summer, with reports suggesting Cabinet Office officials had alerted the then-prime minister to the HMRC dispute.

Zahawi did not disclose the size of the settlement – reported to be an estimated £4.8 million including a 30% penalty – or confirm whether he paid a fine.

Tax lawyer Dan Neidle, who has been working to expose the minister’s tax affairs, estimated that he owed £3.7 million.

In an unusual move, Zahawi did not take founder shares when he set up YouGov, saying in his statement that his father took shares “in exchange for some capital and his invaluable guidance”.

He continued: “Twenty one years later, when I was being appointed chancellor of the Exchequer, questions were being raised about my tax affairs. I discussed this with the Cabinet Office at the time.

“Following discussions with HMRC, they agreed that my father was entitled to founder shares in YouGov, though they disagreed about the exact allocation. They concluded that this was a ‘careless and not deliberate’ error.

“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 added that the matter was resolved and that all his tax affairs were “up to date” when he was appointed Tory party chairman by Sunak in October.

But the prime minister is facing questions over what he knew about the matter and when, as well as calls to sack Zahawi.

Sunak’s promise of a premiership of “integrity” was already thrown into disarray this week after he was fined by police for not wearing a seatbelt and criticised for the allocation of levelling-up funding.

Downing Street said it had nothing to add to Zahawi’s statement and confirmed that the prime minister had confidence in him as Tory chairman.

Opposition parties have demanded an independent probe as well as the publication of all of Zahawi’s correspondence with HMRC.

Labour party chairwoman Anneliese Dodds said Sunak needs to remove Zahawi as party chair, adding: “Zahawi still needs to explain when he became aware of the investigation, and if he was chancellor and in charge of our tax system at the time.

“He needs to explain why his legal representatives said his affairs were up to date in December last year only for him to settle a million-pound fine this month.”

Lib Dem deputy leader Daisy Cooper said: “Zahawi and his Conservative Cabinet colleagues are arrogantly trying to brush this under the carpet.

“There are facts that still need to be established so there must be an independent investigation to get to the bottom of this.”

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