Chequers mate? Sunak's is 'livid' with Zahawi over tax row

HMRC chief wades into Nadhim Zahawi tax row by suggesting Tory chairman didn’t make an ‘innocent error’ as under-pressure minister prepares to face ‘livid’ Rishi Sunak at Chequers Cabinet away day

• Multi-millionaire Mr Zahawi facs calls to quit over tax row involving family trust
• Paid £5million to settle a tax bill with HMRC while he was chancellor last year
• Ministers going to PM’s country estate, Chequers, for Cabinet away day later

The UK’s top taxman waded into the row over the finances of minister Nadhim Zahawi today as he said that there were ‘no penalties for innocent errors’.

HMRC boss Jim Harra made the remark to MPs today, days after the Tory chairman was revealed to have paid £5million to settle a revenue bill while chancellor last year.

Mr Zahawi  will face Rishi Sunak across the Cabinet table today amid reports the Prime Minister is ‘livid’ at him handing Labour a political ‘gift’.

He and other ministers will travel to the PM’s country estate, Chequers, for a Cabinet away day to discuss strategy their for the next election, with Labour considerably ahead in the polls.

The multi-millionaire YouGov founder Mr Zahawi is facing calls to quit over the payment linked to a sale of shares in the polling firm. 

Facing questions from the Public Accounts Committee today, Mr Harra was careful to point out that he was not discussing anyone in particular.

But the chief executive of HMRC added: ‘There are no penalties for innocent errors in your tax affairs. So if you take reasonable care, but nevertheless make a mistake, whilst you will be liable for the tax and for interest if it’s paid late, you would not be liable for a penalty.

‘But if your error was as a result of carelessness, then legislation says that a penalty could apply in those circumstances.’

HMRC boss Jim Harra made the remark to MPs today, days after the Tory chairman was revealed to have paid £5million to settle a revenue bill while chancellor last year. 

Multi-millionaire Mr Zahawi is facing calls to quit after it was revealed he paid £5million to settle a tax bill with HM Revenue and Customs while he was chancellor last year.

He and other ministers will travel to the PM’s country estate, Chequers, for a Cabinet away day to discuss strategy their for the next election, with Labour considerably ahead in the polls.

A new poll by People Polling today gives Labour a 29-point lead with voters, up five points in a week. 

Mr Zahawi was absent from Prime Minister’s Questions yesterday, where Mr Sunak distanced himself from the affair ahead the results of a standards investigation due to report back within weeks.

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He pointed out, to laughter from MPs, that ‘innocent’ was not the term used in legislation.

‘If you have been careless in your tax affairs, and as a result of that carelessness have made a mistake, then you could be liable to penalty.’

Mr Zahawi was absent from Prime Minister’s Questions yesterday, in which Mr Sunak distanced himself from the affair ahead the results of a standards investigation due to report back within weeks.  

According to the Times the PM is furious at the YouGov founder for creating an ethics row. A new poll by People Polling today gives Labour a 29-point lead with voters, up five points in a week.

And Mr Harra told MPs today that officials would help ‘in any way we possibly can’ with the ethics inquiry.

Ministers will be told today that the Conservatives still have a ‘narrow’ path to election victory, provided they can deliver on the public’s priorities and end the party’s toxic infighting.

Mr Sunak will gather his Cabinet at Chequers this afternoon for the away day’ designed to deliver on his New Year pledges and set a course for next year’s election.

Downing Street said ministers would be asked to give updates on progress towards his five pledges, which include restoring economic competence, tackling NHS waiting lists and stopping the Channel migrant crossings.

But they will also hold extended discussions on the party’s strategy for winning the general election pencilled in for the autumn of next year.

Elections guru Isaac Levido will give a detailed presentation on the state of the parties, in which he will warn the Tories have only a ‘narrow’ path to election victory.

Opinion polls have put Labour more than 20 points ahead since last summer, suggesting that Sir Keir Starmer is on course for Downing Street.

But Mr Levido, who played a key role in Boris Johnson’s 2019 landslide win, will tell ministers the lead is ‘softer than it looks’.

A Tory source said: ‘He won’t sugar coat it – the numbers really are not good. But he will say there is a path to victory, albeit a narrow one.

‘The polling suggests that Starmer still is not loved and that support for Labour is not baked in. People will vote Labour if the Tories don’t get their act together, but there is still an opportunity to salvage things.’

Another source said: ‘The polls are not wrong – we are a long way behind on voting intention. But voters are not thinking about an election now, and on the key question of who would make the best prime minister, the numbers are a lot closer.’

Mr Levido will warn ministers that the Conservatives have to end the infighting that saw the party oust two prime ministers last year if they are to have any hope of restoring public trust.

And he will say that delivering on the five priorities is a vital first step in persuading voters that Tory competence has returned.

Mr Sunak’s pledges include halving inflation this year, kickstarting economic growth and bringing the UK’s towering debts under control.

Chancellor Jeremy Hunt, Health Secretary Steve Barclay and Home Secretary Suella Braverman will all give presentations on progress towards the five goals. Work and Pensions Secretary Mel Stride is expected to discuss efforts to persuade hundreds of thousands of people aged over 50 back to work – an issue seen as vital to growth prospects.

Mr Zahawi will attend the event, but sources said he would not give a presentation, despite the focus on electoral strategy, which he is nominally in charge of.

A Tory source said Sir Keir would be targeted over his ‘big areas of vulnerability’, including Labour’s ‘woman problem’, which has left senior figures paralysed in the debate over trans rights that has split the party.

They will also focus on the party’s reliance on funding for trade unions at the heart of the current wave of strikes, Sir Keir’s opposition to deport Channel migrants to Rwanda and Labour’s ‘lack of appetite’ for dealing with concerns about immigration.

Sir Keir last night acknowledged that Labour’s lead in the polls would not necessarily translate into election victory.

In an interview with the Spectator, he said: ‘I am concerned about complacency. In the end we have – I think and I hope – put the Labour party in a position where we are, very clearly, about country first and party second. That’s the first time that’s happened for a long time. But we haven’t won anything yet.’

Mr Harra said that he could not comment on an individual’s tax affairs, but signalled that HMRC could potentially offer a more public comment on a minister’s tax affairs under certain circumstances.

He told MPs: ‘Taxpayers can consent for HMRC to share details of their tax affairs with other people and that’s normal, for example, when they have an agent. However, it would still not be normal for HMRC to publicly comment on someone’s tax affairs even if they had said that it was OK for us to do so.

‘Our requirement not to disclose information publicly sits whether a taxpayer is relaxed about it or not relaxed about it.’

Giving the example of MPs and constituents, he said: ‘Normally, if a taxpayer gives us consent to speak to someone about their tax affairs, then that’s what we would do.

Asked if a minister, or Mr Zahawi, granted permission to HMRC to discuss their tax affairs with the committee, he said: ‘It would not be normal for me to account to this committee for a person’s tax affairs, but if there are general issues about how we manage tax and I’ve got the ability to be disclosive that’s obviously something I would take advantage of.

‘If we are asked by the independent adviser on ministerial interests to help with the inquiry, we will do so in any way we possibly can.’

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