The British Labour Party has called on the prime minister to sack Tory Party chairman Nadhim Zahawi. after he reportedly paid millions to settle a dispute over his tax.
The former chancellor, who attends Rishi Sunak’s Cabinet, has been under pressure 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.
Labour called for an explanation after The Guardian reported on Friday that Zahawi paid HM Revenue & Customs (HMRC) a 30 percent penalty, which was a seven-figure sum.
The government website says a penalty of between 0 and 30 percent is due if it arises because of a lack of reasonable care. A deliberate error can incur a penalty of between 20 and 70 percent.
Deputy Labour leader Angela Rayner said on Friday: “Rishi Sunak promised a government of integrity, professionalism, and accountability but instead he’s propping up a motley crew of scandal-ridden ministers.
“Nadhim Zahawi’s story doesn’t add up. The position of the man who was until recently in charge of the UK’s tax system and who this prime minister appointed Conservative Party chair is now untenable.
“It’s time for Rishi Sunak to put his money where his mouth is and dismiss Nadhim Zahawi from his Cabinet.”
Talking to the BBC on Saturday, Rayner said: “The fact that Nadhim hasn’t been out on the airwaves explaining himself, to me adds insult to injury, especially given that he called this smears at the time and sent legal letters to those that asked questions legitimately about it.
“And when you’re the chancellor, who is in charge of the tax affairs of the UK, and you’ve got a wealth of that nature, you would be expected to know about your tax affairs or to seek that advice at the time as opposed to not paying those taxes and having to pay a penalty notice.”
She added: “I believe his position is untenable. If he’s lied and misled the public and HMRC regarding his tax affairs then I think his position is untenable.”
‘Right and Proper’
Deputy Prime Minister Dominic Raab has defended Zahawi.
He told Sky News: “Nadhim has been very clear that he’s paid all the tax that he’s owed, that he’s paid it on time, that there’s nothing outstanding due, and I think that’s of course right and proper.”
Asked whether he is confident that Zahawi is being open and honest about his tax affairs, Raab said: “Yes, I think he has been in the way I’ve described.”
Asked if Zahawi will still be in his post in a month’s time, Raab said: “A month’s a long time in politics. I certainly hope so.”
He added: “There’s no tax due. I mean, I think that’s the critical point in this, but if there’s further questions of course I’m sure there’ll be the proper transparency.”
But Labour’s shadow chancellor Rachel Reeves rejected Raab’s defence of Zahawi.
She said after a speech at the Fabian Society: “Dominic Raab, who’s being investigated for bullying, is passing judgment on Nadhim Zahawi, who’s just had a £1 million [$1.24 million] fine for not paying his taxes on time. That pretty much epitomises this Conservative Cabinet.
“A few months ago, he was chancellor of the Exchequer. You may forget because there were four of them last year, but he was chancellor of the Exchequer and responsible for Britain’s tax affairs and tax collection and we now find that he wasn’t so keen to pay himself.
“So if the prime minister wants to stick by his commitment for integrity, honesty, and professionalism, he should do the right thing and sack Nadhim Zahawi.”
A spokesman for Zahawi previously said his taxes were “properly declared and paid in the UK” and the minister had “never had to instruct any lawyers to deal with HMRC on his behalf.”
Sunak has defended him, telling Prime Minister’s Questions on Wednesday that Zahawi “has already addressed this matter in full and there’s nothing more that I can add”.
The prime minister’s press secretary said Zahawi “has spoken and been transparent with HMRC.”
On whether 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.”
A spokesperson for HMRC said that it could not comment on identifiable taxpayers.
Labour suggested that an inquiry might be required to look into the matter and the party has now submitted a series of questions to HMRC seeking clarity over the allegations.
In the letter, Rayner said: “I understand that HMRC’s position is that you do not comment on the tax affairs of individuals. However, given the public interest in this case as well as the serious questions raised about a potential conflict of interest at the heart of government, the public require answers.
“In particular, there appears to be an element of special treatment directed towards Nadhim Zahawi by HMRC,” she claimed.
PA Media contributed to this report.