Labor has called on pressured cabinet minister Nadhim Zahawi to publish his tax returns from the past five years amid growing questions over his settlement with HMRC.
Anneliese Dodds, leader of the Labor Party, told UKTN that the Tory chairman had “not been clear” about the dispute with HMRC and should therefore publish his returns “in the interests of transparency and clarity”.
UKTN first revealed last July that Mr Zahawi was subject to an investigation by HMRC in connection with the sale of shares in polling company YouGov, which he co-founded 22 years ago.
Ms Dodds said the former chancellor could help clear up the controversy by publishing his full tax return dating back to 2018, the year a stake in YouGov was sold by Balshore Investments – a Gibraltar-registered family trust linked to Mr Zahawi.
“Nadhim Zahawi has not been clear about the serious questions he needs to answer on his tax affairs,” Ms Dodds said. “I reluctantly have to ask him to publish his tax returns in the interest of transparency and clarity.”
She added: “This could have been avoided if Nadhim Zahawi had answered simple questions about this affair, such as when he was made aware of an HMRC investigation, how much was paid and why these reports seem to contradict his previous statements. to speak. Unfortunately, he failed to do so.”
In a statement admitting his “mistake” on Saturday, Mr Zahawi did not disclose the scope of the HMRC settlement – which The protector reportedly estimated at £4.8 million including a 30 per cent fine – or confirm whether he has paid a fine.
Mr Zahawi denied allegations that he evaded tax by using an offshore company Balshore Investments, registered in Gibraltar, to hold shares in YouGov.
In an unusual move, Mr Zahawi did not take founder shares when he founded YouGov, saying in his statement that Balshore Investments took shares from his father “in exchange for some capital and his invaluable guidance”.
Mr Zahawi said “questions were raised about my tax affairs” when he was appointed chancellor by Boris Johnson in July, saying he had discussed it with the cabinet at the time. But the timing of the settlement with HMRC is still unclear.
He stated: “Following discussions with HMRC, they agreed that my father was entitled to founder shares in YouGov, although they disagreed on the exact allocation. They concluded that this was a ‘careless and unintentional’ error… I chose to settle the matter and pay what they believed was due.
Tax lawyer Dan Neidle, who has worked to uncover the minister’s tax affairs, estimated that Mr Zahawi may owe £3.7million capital gains tax on those shares, which eventually sold for £27million. But the spokesman for the Tory chairman said: “Nadhim Zahawi does not recognize this amount.”
Labor has called on Rishi Sunak to sack Mr Zahawi and has called for an investigation into whether he had misled the public or breached ministerial code in his claims about his taxes.
Ms Dodds said there were clear discrepancies between Mr Zahawi’s statements in summer 2022 that he had paid his taxes in full, and reports that he had paid a “seven-figure” settlement and fine to HMRC.
She has also raised questions about how quickly the tax issue appeared to be resolved given the length of such settlement negotiations – asking whether there is a “VIP fast lane” for ministers and whether there was any contact between the government and HMRC on the matter .
“Rishi Sunak pledged honesty, integrity and responsibility when entering No10. He too must be clear about what he or No10 knew about Zahawi’s tax affairs and why he was appointed to the cabinet,” Ms Dodds said. “The public deserves politicians who pay their taxes and keep their promises.”
Foreign Secretary James Cleverly said Mr Zahawi has been “open” about his tax affairs and insisted he would remain in office next week despite calls to sack him.
But the minister dodged questions about whether Mr Zahawi negotiated his tax settlement with HMRC when he was chancellor, and what Mr Sunak knew when he appointed him party chairman. “I’m not a researcher,” Mr. Cleverly said. “I don’t know more than is stated in his statement.”
Sir Iain Duncan Smith, however, suggested that Mr Zahawi provide all the “facts” of his tax affairs – and advised the Tory chairman to “find everything out now” when asked about the controversy on the UKTN.
“The sooner you can get the facts out the better, rather than letting them all come out in stages,” said the former Tory leader. “I’d say to him if he were here now, ‘Get it all out now – whatever you have to do to clean it all up’.”
Liberal Democrat deputy leader Daisy Cooper said Mr Cleverly’s “apologies for being the type of dog ate my homework just didn’t wash with the public”.
She has written to Cabinet Secretary Simon Case urging him to investigate whether Mr Zahawi should have declared ties to Balshore and YouGov stocks. “There are facts that have yet to be established, so there needs to be an independent investigation to get to the bottom of this.”
Labour’s shadow chancellor Rachel Reeves vowed a Labor government would “drain the swamp”, saying Sunak was “too weak” to enforce proper standards. “It will take a new Labor government to clean up this mess and drain the swamp because quite frankly it stinks.”
When asked if ministers would publish their tax returns under a Labor government, she told the UKTN Sunday With Laura Kuenssberg program: “I would like to do that if necessary.”
Pat McFadden, Labour’s shadow chief, Chancellor of the Exchequer, says “maybe” all politicians should publish their tax returns, telling Sky News: “I wouldn’t have a problem with that.”
Downing Street said it would add nothing to Mr Zahawi’s statement, confirming that the Prime Minister still had confidence in him as Tory chairman.