UK PM orders probe into ally Zahawi’s tax affairs

Britain's governing Conservative Party chairman Nadhim Zahawi leaving Downing Street after a meeting. PHOTO: EPA-EFE

LONDON - British Prime Minister Rishi Sunak on Monday ordered an investigation into a wealthy ally’s murky tax dealings as he again vowed “integrity” in his government after Mr Boris Johnson’s scandal-plagued tenure.

As well as the probe into Conservative party chairman Nadhim Zahawi, Mr Sunak faced hostile questions about the appointment of BBC chairman Richard Sharp, a former banker who acted as a go-between to help funnel a loan to Mr Johnson when he was in 10 Downing Street.

The apparent scandals surrounding well-off individuals threaten to become a political distraction for Mr Sunak as he battles to restore the Conservatives’ standing in the polls in the midst of Britain’s worst cost-of-living crisis in decades.

Mr Sunak refused to accede to opposition demands to fire Mr Zahawi, who reportedly settled a seven-figure demand from tax authorities with a fine for late payment when he served briefly as chancellor of the exchequer last year under Mr Johnson. The Prime Minister and instead commissioned a probe by his newly appointed ministerial ethics advisor, Mr Laurie Magnus, conceding that “clearly in this case, there are questions that need answering”.

Mr Sunak appointed Mr Zahawi as party chairman, and Cabinet minister without portfolio, when he entered Downing Street in October.

He deflected questions about Mr Zahawi’s activities prior to then, as concerns mounted about whether Mr Johnson knew of the tax investigation when he appointed the Iraqi-born politician as chancellor and head of the UK’s tax authority.

Mr Zahawi welcomed the probe and insisted he did nothing wrong in the tax case, which stems from his co-founding of the successful polling company YouGov in 2000.

Mr Zahawi said he’d been “careless” with his tax affairs, following the report that he’d paid a £4.8 million (S$7.82 million) bill to His Majesty’s Revenue & Customs, including a 30 per cent penalty for not settling the correct amount at the time. But opposition parties have pointed to his shifting explanations as more details have emerged in newspaper reports, and to his prior threats of libel lawsuits against journalists and a tax consultant.

Mr Zahawi’s “position is totally untenable, and it shouldn’t be a case that we are sitting around waiting for him to resign, the Prime Minister should be sacking him”, Labour Party shadow cabinet member Lucy Powell told BBC radio on Monday. 

Since coming to office, Mr Sunak has faced questions over his re-appointment of Home Secretary Suella Braverman less than a week after she resigned over a security breach. Mr Gavin Williamson quit the Premier’s top team in November over bullying allegations, while Deputy Prime Minister Dominic Raab also faces multiple complaints of bullying. On Friday, Mr Sunak received a fixed penalty notice from police in Lancashire, in the north of England, for failing to wear a seat belt in a moving car. That was his second fine in less than a year following one during the so-called Partygate scandal for breaking Covid-19 rules. AFP, BLOOMBERG

Britain’s chairman of the governing Conservative Party, Nadhim Zahawi, will not step down over a dispute about his tax affairs, allies of the former finance minister said on Monday, after opposition lawmakers again called for his resignation.

In the three months since Mr Rishi Sunak was appointed prime minister, his government has been buffeted by questions over the probity of some of his lawmakers after he promised to lead the country with “integrity, professionalism and accountability”.

“He will not be standing down,” one ally said of Mr Zahawi, after the Conservative chairman gave details of how he settled a dispute with Britain’s tax authorities. They ruled that he had been “careless” with his declarations but had not, he said, deliberately made an error to pay less tax.

The opposition Labour Party said Mr Sunak, who became Britain’s third prime minister in as many months after his two predecessors were brought down first by scandal and then economic chaos, was too weak to sack Mr Zahawi.

“His position is totally untenable, and it shouldn’t be a case of we are sitting around waiting for him to resign, the prime minister should be sacking him,” Ms Lucy Powell, a senior Labour lawmaker, told BBC News.

“Every day that passes just shows the weakness of the prime minister that he’s actually unable to sack Nadhim Zahawi.”

The case relates to Mr Zahawi’s co-founding of opinion polling firm YouGov in 2000. He said he had asked his father to help finance and support the launch, in exchange for a stake.

He said when he was made finance minister last year by former prime minister Boris Johnson, questions were raised about his tax affairs, prompting him to raise them with government officials and the tax office which disagreed with the number of shares given to his father.

“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 said in a statement released on Saturday.

He also said the tax office found he had not set up offshore tax arrangements, but the statement did not address whether he paid a penalty to the tax office.

A tax policy website - Tax Policy Associates - has estimated that Mr Zahawi should have paid £3.7 million (S$6 million) based on the capital gains tax incurred by the sale of tranches of shares in YouGov worth more than £20 million.

The Guardian newspaper has reported that tax authorities had imposed a 30 per cent penalty on top of the owed tax.

According to the government’s website, a penalty of 30 per cent could be paid when there was “lack of reasonable care” or where the error is considered to be deliberate.

Former Conservative Party leader Iain Duncan Smith said on Sunday Mr Zahawi should publish all information relating to the case and “get it all out now, whatever you have to do, and clear it up”. REUTERS

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