Nadhim Zahawi fights to stay in job amid row over tax affairs

Rishi Sunak ordered a probe into Nadhim Zahawi today admitting 'questions need answering' over his tax affairs.

The PM has asked his standards advisers to examine the situation after it emerged he paid millions of pounds to settle a dispute with HMRC while he was Chancellor last summer.

Allies of Mr Zahawi insist he has no intention of quitting, stressing the tax authorities accepted the error was 'careless' rather than deliberate, and he opted to pay the full amount demanded rather than negotiating. Downing Street has up to now voiced confidence in the senior minister.  

However, the row is showing little sign of abating, with Labour branding Mr Zahawi's position 'untenable' and senior Conservatives suggesting he will need to answer more questions.

Research by Find Out Now conducted over the weekend found that 59 per cent thought Rishi Sunak should dismiss him. Just 14 per cent said he should stay on, while 28 per cent were not sure.  

Mr Zahawi shouted a cheery 'morning' to waiting reporters and photographers as he arrived at Tory HQ in Westminster today. 

Mr Zahawi admitted on Saturday that he had paid back money to the taxman after making an error – although he did not address allegations that he had to pay back as much as £4.8million, including a major penalty over his shareholdings in polling firm YouGov.

He denied allegations that he avoided tax by using an offshore company registered in Gibraltar to hold shares in YouGov.

Former minister Tim Loughton told BBC Radio 4's Westminster Hour last night: 'I think it's fair to let him (Mr Zahawi) have his say and put his side of the case. It would have just been more helpful if he had done that rather more fully rather earlier on.'

Mr Loughton added: 'I don't know if Nadhim has done something ill-advised or inappropriate.

'He has certainly not done anything illegal by the sounds of it otherwise there would be more implications.

'If there is more to it, then he will absolutely have to stand up and take the consequences and the Prime Minister, I'm sure, will take the appropriate action.

'But at the moment we don't know the whole story.'

Other Tories including former party leader Iain Duncan Smith have warned Mr Zahawi must share more information. 

Lord Young of Cookham told Times Radio: 'I think that Nadhim will need to be more transparent about exactly what happened, otherwise the story simply isn't going to go away.'

He added: 'Normally a Cabinet minister, particularly somebody who is well off as Nadhim clearly is, would have some really professional reputable accountants dealing with all his tax affairs, making sure that you didn't get into the sorts of difficulties that we are seeing.'

Mr Zahawi did not take founder shares when he set up YouGov, saying in his statement on Saturday 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.'

HMRC agreed that he had never set up an offshore structure, including Balshore Investments, 'and that I am not the beneficiary of Balshore Investments,' Mr Zahawi said.

He added that the matter was resolved and that all his tax affairs were 'up to date' when he was appointed Conservative party chairman by Mr Sunak in October.

Sources stressed that there was no 'negotiation' with HMRC, and Mr Zahawi merely ordered his accountants to pay what the tax authorities asked in order to clear the matter up. 

The Sun on Sunday said Mr Zahawi - founder of polling firm YouGov - had been put forward for a knighthood in the recent honours process, but did not feature on the final list.

A source close to the former vaccines minister said: 'Nadhim is very proud to have run the UK's world-beating vaccine rollout, and reopened schools during Omicron.

'And it was the honour of his life to coordinate Her Majesty's funeral when in the Cabinet Office. He did those things to serve the country he loves and that is reward enough.'

A Westminster source familiar with the process told MailOnline: 'These faceless apparatchiks go around awarding themselves every honour under the sun at the drop of a hat. 

'But when someone leads the only two successes of the State in recent hears, in vaccines and Her Majesty's funeral, some pen-pusher decides to block recognition of true achievement because of some technical accounting point. It's shameful.' 

Despite the growing controversy his Cabinet colleague James Cleverly insisted yesterday that he would not be sacked.

Asked if Mr Zahawi would survive until Prime Minister's Questions on Wednesday, the Foreign Secretary told Sky News: 'Yes, because he is a very, very effective minister, he has shown himself to be a successful businessman before coming into politics.' But Mr Cleverly faced mockery for claiming in a separate interview that he did not know the details of Mr Zahawi's situation because he had spent the previous day 'shopping'.

A former first permanent secretary of HMRC said the taxman had a traffic-light system to warn the Government of any risks of giving a knighthood to someone with tax problems. Sir Edward Troup told the BBC: 'They don't decide whether the honour or the peerage is given but they give the information to those who do make the decision, who form their own judgment.'

There have been growing calls for ministers to publish their tax returns, as is standard practice for presidential candidates in the US.

But Mr 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 other people might do.'