Rishi Sunak sacks Nadhim Zahawi after tax probe finds ‘serious breach’ of rules

Rishi Sunak has sacked Nadhim Zahawi as Tory party chairman over a “serious breach” of the ministerial code, after The Independent first revealed details of an HMRC investigation.

The prime minister said on Sunday that his ethics adviser Sir Laurie Magnus had found Mr Zahawi had broken the ministerial rules around disclosure of the tax probe – including make “untrue” public statements.

In a letter to Mr Zahawi, Mr Sunak wrote: “Following the completion of the independent adviser’s investigation – the findings of which he has shared with us both – it is clear that there has been a serious breach of the ministerial code.”

The PM added: “As a result, I have informed you of my decision to remove you from your position in His Majesty’s Government.”

It emerged earlier this month that Mr Zahawi had paid a £1m penalty as part of a £5m tax settlement, prompting pressure Tory MPs for the senior figure to quit and end the “distraction” of the tax saga.

The Independent first revealed in July 2022 that HMRC was investigating Mr Zahawi’s taxes in relation to an offshore company Balshore Investments, which had held shares in the polling company he co-founded, YouGov.

Mr Zahawi intially dismissed the story as a “smear”, claimed he was “not aware” of HMRC inquiries, and threatened The Independent and others with legal action. But last Saturday, the minister admitted that HMRC had found an “error” that was “careless and not deliberate”.

Sir Laurie revealed in his letter to Mr Sunak that the HMRC investigation had started back in April 2021, and that Mr Zahawi had attended a meeting with tax officials about it in June 2021 – well before he was appointed education secretary in September 2021.

Mr Zahawi told Sir Laurie that he had “formed the impression” he was only being asked “certain queries” over his tax affairs. But the ethics adviser said Mr Zahawi should have understood the investigation was a “serious matter”.

The No 10 ethics adviser also accused him of making an “untrue public statement” about the probe, saying ministers have a duty to “be as open as possible with parliament and the public”.

Sir Laurie also found serious “omissions” by Mr Zahawi to government officials which fell short of the standards set out in the ministerial code.

He said the cabinet minister had “shown insufficient regard” for the code – and the requirements under the seven principles of public life – to be “honest, open and an exemplary leader through his own behaviour”.

By failing to declare the tax issue before Boris Johnson made him chancellor in July 2022 – despite the declaration of interests form including specific prompts on tax disputes – Mr Zahawi failed to declare interests “which might be thought to give rise to a conflict”, said the adviser.

Sir Laurie also told the PM Mr Zahawi “failed to disclose relevant information” on the tax probe when he was appointed Cabinet Office minister by Liz Truss in September and Tory chairman by Mr Sunak in October, including to Cabinet Office officials who support that process.

“Without knowledge of that information, the Cabinet Office was not in a position to inform the appointing prime minister. Taken together, I consider that these omissions constitute a serious failure to meet the standards set out in the ministerial code,” said Sir Laurie.

Mr Zahawi has not disclosed the size of the HMRC settlement, reportedly £4.8m, including a 30 per cent penalty of around £1m. His spokesman has not denied the sums. Sir Laurie’s letter reveals that matter was finally settled in September 2022.

In a letter to the PM, the departing Tory chairman said he could be “assured of my support from the backbenches in the coming years”.

Mr Zahawi said he took particular pride in the Covid vaccine rollout as vaccines minister, and helping with arrangements for the Queen’s funeral during his time in charge at the Cabinet Office.

Labour’s Bridget Phillipson, shadow education secretary, said Mr Zahawi had “failed to pay the taxes he owed in this country and tried to silence those who spoke out about it” – before criticising the PM for taking so long to sack him.

“Despite the writing on the wall, the prime minister showed himself to be too weak to act,” said the Labour frontbencher. “It’s vital that we now get answers to what Rishi Sunak knew and when did he know it? We need to see all the papers, not just have the prime minister’s role in this brushed under the carpet.”

The Liberal Democrats called on Mr Zahawi to resign his seat as an MP. “He has shown he is unfit to serve in cabinet and unfit to serve the people of Stratford-on-Avon,” said deputy leader Daisy Cooper, who also called for an independent inquiry into the affair.

Labour’s Andy Burnham said Mr Sunak should temporarily remove deputy prime minister Dominic Raab – under investigation over bullying claims. “When ministers are subject to serious investigations like that, I think they should temporarily step aside from their roles.”

Cabinet minister Michael Gove suggested that the Tories should not be “damned” by Mr Zahawi’s “sin” was questioned on the BBC’s Sunday with Laura Kuenssberg programme about his sacking.

Asked about a number of Tory politicians “trying to follow their own set of rules”, Mr Gove said: “There are always people who will fall short, whether it’s in politics or other parts of public life, or professional life, or in any area.”

The levelling up secretary said: “Because someone commits a lapse or a sin, that shouldn’t be automatically taken as an opportunity to damn an entire organisation or a way of working”.

Source: independent.co.uk