Get all your news in one place.
100’s of premium titles.
One app.
Start reading
The Guardian - UK
The Guardian - UK
National
Josh Halliday and Heather Stewart

How we got here: events leading up to Nadhim Zahawi’s sacking for breaching ministerial code

Nadhim Zahawi arrives at the HM Treasury in July 2022 to start his new job as chancellor
Nadhim Zahawi arrives at the HM Treasury in July 2022 to start his new job as chancellor. Photograph: Daniel Leal/AFP/Getty Images

Questions have surrounded Nadhim Zahawi’s tax affairs for months and the row came to a head on Sunday when he was sacked as chair of the Conservative party for multiple breaches of the ministerial code.

The controversy centred on a tax bill over the sale of shares in YouGov, a polling firm that Zahawi co-founded. The shares were worth an estimated £27m and were held by Balshore Investments, a company registered offshore in Gibraltar and linked to Zahawi’s family.

Here is how the story unfolded.

April 2021 HMRC begins its investigation of Zahawi’s tax affairs, which includes a meeting with him and his tax advisers in June 2021. Zahawi, a business minister at the time, subsequently told the prime minister’s ethics adviser, Sir Laurie Magnus, that he had been under the impression that he was “merely being asked certain queries”. But Magnus says he should have understood it was an investigation and that it was a “serious matter”, informed his permanent secretary, and disclosed it in his ministerial declaration of interests.

September 2021 Zahawi is promoted to education secretary by Boris Johnson. He did not declare the ongoing HMRC investigation into his tax affairs, Magnus says, “despite the ministerial declaration of interests form including specific prompts on tax affairs and HMRC investigations and disputes”.

5 July 2022 After he is appointed chancellor, Zahawi completes another declaration of interests form, which again “contained no reference to the HMRC investigation”. Only after receiving a formal letter from HMRC on 22 July did he fill in a “later form” acknowledging that he was “in discussion” with HMRC, in an attachment.

8 July 2022 Zahawi threatens to take legal action against the Independent after it asks him a series of questions and informs him it plans to report the fact of the HMRC investigation.

9 July 2022 The Independent breaks the news of the HMRC investigation into Zahawi. The newspaper also reports that the National Crime Agency and Serious Fraud Office had looked into Zahawi’s tax affairs from 2020, when he was vaccines minister.

10 July 2022 The Observer reports that Boris Johnson was alerted by the Cabinet Office’s propriety and ethics team to a “flag” over Zahawi’s tax affairs before he was appointed chancellor. Zahawi denounces the “smears” and denies any knowledge of an HMRC investigation, 13 months after he was interviewed by tax officials about his affairs. He tells Sky News: “I was clearly being smeared. I was being told the Serious Fraud Office, the National Crime Agency, the HMRC are looking into me. I’m not aware of this. I’ve always declared my taxes, I paid my taxes in the UK.” He did not correct the record until January 2023. Magnus finds this to have been “inconsistent with the requirement for openness” on ministers.

15 July 2022 Zahawi updates his ministerial declaration of interests to acknowledge that he was under HMRC investigation but provides no further details. This emerged when Magnus published his findings on 29 January 2023.

August 2022 Zahawi reaches an in-principle agreement with HMRC while he is still chancellor, including a penalty. He finally settles the following month. Magnus finds that this fact “requires declaration and discussion” and is “a relevant interest which could give rise to a conflict”, particularly for a Treasury minister.

September 2022 Liz Truss appoints Zahawi to the role of chancellor of the duchy of Lancaster in her short-lived government. Again, he fails to declare the HMRC investigation or the penalty he agreed to pay.

October 2022 Zahawi is handed the job of chair of the Conservative party by Rishi Sunak. Yet again, he does not make a declaration about his tax affairs.

8 January 2022 The Sun on Sunday reports that Zahawi agreed to pay several million pounds in tax to settle a dispute with HMRC. It does not say when the settlement was reached or how. A spokesperson for the Conservative party chair says his taxes were “properly declared” and that he “has never had to instruct any lawyers to deal with HMRC on his behalf”.

16 January 2023 Zahawi tells Magnus he has updated his party chairman ministerial declaration of interests with the outcome of the HMRC investigation. Magnus says this should have been done on 25 October, when he was appointed.

18 January 2023 Zahawi’s spokesperson provides a statement to the BBC’s Newsnight programme saying his tax affairs “were and are fully up to date and are paid in the UK”.

20 January 2023 The Guardian reveals that Zahawi agreed to pay a penalty as part of his multimillion-pound HMRC settlement. Experts estimate the tax due was about £3.7m, based on the capital gains tax incurred by the sale of multiple tranches of shares in YouGov worth more than £20m, which led to transfers of money to Zahawi. It is understood HMRC applied a 30% penalty to the £3.7m, bringing the total due to £4.8m.

21 January 2023 Following the Guardian story, Zahawi acknowledges for the first time that he had reached a settlement with HMRC, belatedly correcting his denial from July 2022 that he was not under investigation. He claims HMRC concluded that his tax errors were “careless and not deliberate”.

23 January 2023 Sunak says there are “clearly questions that need answering” and asks Magnus to investigate Zahawi’s tax affairs. Zahawi ignores calls to step aside while the investigation is ongoing.

29 January 2023 Zahawi is sacked as Conservative party chair after Magnus finds serious breaches of the ministerial code.

Sign up to read this article
Read news from 100’s of titles, curated specifically for you.
Already a member? Sign in here
Related Stories
Top stories on inkl right now
Our Picks
Fourteen days free
Download the app
One app. One membership.
100+ trusted global sources.