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Nadhim Zahawi Sacked By Rishi Sunak Over Tax Affairs

Tory party chairman Nadhim Zahawi has been sacked after an investigation into his tax affairs (Alamy)

7 min read

The Prime Minister Rishi Sunak has sacked Tory party chairman Nadhim Zahawi over "a serious breach of the ministerial code" following an investigation into his tax affairs.

In a letter to Zahawi published this morning, Sunak said he had received the results of a probe by his ethics adviser Laurie Magnus, and had decided to make his decision.

He 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.

"As a result, I have informed you of my decision to remove you from your position in His Majesty’s Government."

Sunak begins his letter by saying to Zahawi that when he entered Number 10 he pledged the government he led “would have integrity, professionalism and accountability at every level”, which is why he called for Magnus to look into his conduct.

He added to the Conservative party chair, a former vaccines minister, that he should be “extremely proud" of his “wide-ranging achievements in government over the last five years”.

The PM finished by saying: “It is also with pride that I, and previous Prime Ministers, have been able to draw upon the services of a Kurdish-born Iraqi refugee at the highest levels of the UK government.

“That is something which people up and down this country have rightly valued. I know I will be able to count on your support from the backbenches as you continue to passionately and determinedly serve your constituents of Stratford-on-Avon and represent the many issues and campaigns you are dedicated to.”

In response Zahawi told the PM he can be "assured of my support from the backbenches in the coming years", in a letter he posted on Twitter responding to his sacking, saying: “Your five priorities are the right priorities, and I will do whatever I can to help you deliver them."

He did not explicitly mention the findings of the inquiry into his tax affairs, but instead attacked the media who have delved into his business affairs, saying he is concerned "about the conduct from some of the fourth estate in recent weeks”.

Zahawi added: "It has been, after being blessed with my loving family, the privilege of my life to serve in successive governments and make what I believe to have been a tangible difference to the country I love."

Rishi Sunak House of Commons
Rishi Sunak has sacked his party chairman after a breach of the ministerial code (Alamy)

Alongside Sunak’s letter Downing Street has also published the results of Magnus’s inquiry, with the ethics adviser accusing Zahawi of failing to tell people in government about his contact with HMRC as he faced an investigation over his tax affairs when he was appointed Education Secretary in 2021, and then as Chancellor last summer.

“I consider that these omissions constitute a serious failure to meet the standards set out in the Ministerial Code,” Magnus wrote.

He added: "I consider that Mr Zahawi, in holding the high privilege of being a Minister of the Crown, has shown insufficient regard for the General Principles of the Ministerial Code and the requirements in particular, under the seven Principles of Public Life, to be honest, open and an exemplary leader through his own behaviour.”

Allegations that Zahawi was under scrutiny by the taxman over an unpaid bill relating to an offshore trust and his shares in the polling company YouGov which he co-founded have swirled since last summer, but had gone quiet until The Sun on Sunday revealed earlier this month he had paid HMRC several million pounds in a settlement.

A further story in The Guardian suggested he had also paid a penalty for failing to originally pay the right amount of tax, taking his entire bill to around £5m.

Zahawi has repeatedly defended his position, and said the settlement included a penalty applied on the basis of “carelessness”, but had failed to speak publicly to address the situation.

Despite having originally defended his minister, saying at Prime Minister’s Questions he had addressed the matter in full, Sunak later ordered an inquiry by Magnus saying more information “has entered the public domain”.

On Wednesday the PM told Labour leader Keir Starmer in the Commons that the issues occurred before he entered Number 10, and that "no issues were raised with me when he was appointed to his current role”.

PoliticsHome reported earlier this week concern among Conservative MPs that the Zahawi affair would drag on and distract from the Prime Minister's policy agenda. One senior Tory said the row was “a gift for the Labour Party".

But Sunak said he wanted to wait for Magnus’s report before taking action, saying he believes “in proper due process”.

The four-page letter to Sunak from Magnus shows Zahawi’s tax affairs were “resolved in principle in August 2022 with a settlement agreement signed in September 2022”, while he was Chancellor of the Exchequer under Boris Johnson

It also shows his interaction with HMRC “commenced in April 2021”, far earler than had previously been reported.

Magnus said that on the basis of the confidential information he had access to, he believed Zahawi “should have understood at the outset that they were under investigation by HMRC and that this was a serious matter”, and as a minister should have been raised with the permanent secretary in their department.

But he said that after his appointment as Chancellor on July 5 last year Zahawi completed a declaration of interests form "which contained no reference to the HMRC investigation”.

Nadhim Zahawi
Nadhim Zahawi is accused of "omissions" in his statements over his HMRC investigation (Alamy)

Magnus is also deeply critical of Zahawi’s public statements about his tax affairs, after the former minister claimed last July that “here have been news stories over the last few days which are inaccurate, unfair and are clearly smears”.

The ethics adviser wrote: “Zahawi has told me that at the time of this statement, he was under the impression that he was answering HMRC’s queries, but that he was not under investigation.

“I consider that an individual subject to the HMRC process faced by Mr Zahawi should have understood that they were under investigation by HMRC and that this was a serious matter.”

In conclusion the PM’s advisers on ministerial interests wrote: “In the appointments process for the governments formed in September 2022 and October 2022, Mr Zahawi failed to disclose relevant information - in this case the nature of the investigation and its outcome in a penalty - at the time of his appointment, 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."

Responding to Zahawi’s sacking, Levelling Up Secretary Micheal Gove told the BBC this morning: “The Prime Minister’s whole way of operating is driven by a sense of duty and a sense of profound moral seriousness.

"That means when an allegation is put against someone, he doesn’t immediately think: ‘Right, I’m in political difficulty, let me deal with this in the way that the cynic might imagine is right. I will do right by individual accused, and I will also do right by the process overall’.”

Asked on the Sunday With Laura Kuenssberg programme if Sunak should have carried out more checks before appointing Zahawi. Gove replied: ”To the best of my knowledge, I'm absolutely sure, that there was no alert that was given to either Rishi or indeed to Liz Truss.

“So, again, Westminster will always have rumours, speculation, speculative reporting.”

Nadhim Zahawi letter
Nadhim Zahawi tweeted his letter to Rishi Sunak following his sacking (Twitter)

But Bridget Phillipson, Labour's shadow education secretary, said the PM should have acted earlier, telling Sky News: "Nadhim Zahawi failed to pay the taxes he owed in this country and tried to silence those who spoke out about it.

"Despite the writing on the wall, the Prime Minister showed himself to be too weak to act. Rishi Sunak should have sacked Nadhim Zahawi a long time ago, just as he should have acted over Dominic Raab and Suella Braverman, but in his weakness he promoted them.”

Daisy Cooper, deputy leader of the Liberal Democrats, said Zahawi should stand aside as an MP.

"He has shown he is unfit to serve in Cabinet and unfit to serve the people of Stratford-on-Avon," she said.

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