‘I don’t believe’ prime minister was aware of Zahawi’s HMRC penalty, says minister

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Pressure is growing on Conservative party chairman Nadhim Zahawi after the prime minister launched an inquiry into his behaviour yesterday, following reports that he reached a settlement over a tax dispute with HMRC during his time as chancellor.

The exact size of the settlement has not been disclosed, but it is reported to be an estimated £4.8m including a 30% penalty.

This news dominated headlines over the weekend, prompting Mr Zahawi to release a statement on Sunday, admitting that he paid what HMRC said “was due” after it “disagreed about the exact allocation” of shares in the YouGov polling company he co-founded. He noted that the error was “careless” but not deliberate.

It is widely believed that Mr Zahawi made the settlement during his short time as chancellor under the then-prime minister Boris Johnson.

Asked on Sky News this morning if Mr Sunak was aware of the penalty levied against Mr Zahawi, home office minister Chris Philp replied: “I don’t believe so.”

He added: “My understanding is that when the prime minister appointed Nadhim Zahawi, his understanding was there were no outstanding tax issues at that time….

“Clearly, over the weekend, further things were disclosed publicly, which has led the prime minister to appoint the independent ethics adviser to investigate. … It shows that the prime minister is acting exactly as he said he would to maintain ethics and standards in public life.”

It comes as Conservative MPs pile on the pressure over Zahawi with one senior backbencher calling yesterday evening for the party chair to stand down.

Caroline Nokes, the former minister and chairman of the Women and Equalities Select Committee, told TalkTV: “There are countless examples of good, competent Cabinet colleagues who have got themselves in a mess who have resigned quickly and come back, really in some instances, just a few months later and I think in order to get this cleared up Nadhim should stand aside and let the investigation run its course”.

She is the first Conservative MP to publicly call for Nadhim Zahawi to quit, although privately negative briefings have been going on for some time.

Labour has demanded to know whether prime minister Rishi Sunak knew that Mr Zahawi had paid a penalty to HMRC when he appointed him as party chair.

Foreign secretary James Cleverly addressed the matter on Sunday morning. He defended Mr Zahawi as an “effective” minister, but added that he had been unable to find out more details as he was busy over the weekend “having a bit of a rest and doing some shopping”.

Speaking to Sky News yesterday morning, shadow business secretary Jonathan Reynolds stepped up Labour’s calls for Mr Zahawi to be sacked. He said “I think the minimum the British public expect from any politician, but certainly someone who’s been the chancellor of Exchequer, is that they would have paid all their taxes without having to be prompted to do so or harassed or campaigned against to do so.

“And the position to me is completely untenable. And I think the prime minister has got to act and we’ll see that very quickly today”.

Mr Reynolds added that the questions about Mr Zahawi influence politics on a wider scale.

Sources close to Mr Zahawi have insisted that the former chancellor is “absolutely not going to resign” over the issue.

Asked last Wednesday during Prime Minister’s Questions about Mr Zahawi’s tax affairs, Mr Sunak said: “My right honourable friend has already addressed the matter in full and there is nothing more that I can add.”

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