Nadhim Zahawi fights to cling on amid row over tax settlement

Can Nadhim Zahawi cling on? Minister admits he ‘doesn’t know’ what happened over Tory chair’s multi-million pound tax settlement after Rishi Sunak triggers sleaze probe – with MPs urging him to stand aside as grim poll shows Labour lead hitting 22 points

• Rishi Sunak has triggered standards probe into Nadhim Zahawi tax settlement
• Tory MP Caroline Nokes has broken cover to call for Tory chair to stand aside 

Nadhim Zahawi is battling to cling on today as Rishi Sunak’s standards watchdog begins a probe over his multi-million pound tax settlement.

The Tory chair has insisted he has no intention of quitting and welcomed the investigation by the PM’s independent adviser.

But his position is looking increasingly perilous after Mr Sunak admitted there are ‘questions’ that needed answering. Police minister Chris Philp faced a battering on the issue during a round of broadcast interviews this morning, admitting that he ‘doesn’t know’ what happened between Mr Zahawi and HMRC.

Meanwhile, unrest on Conservative benches is growing as a grim poll showed Mr Sunak’s personal ratings have tumbled over the past week, with Labour 22 points ahead.

Former minister Caroline Nokes has said that Mr Zahawi should stand aside from his role while the standards inquiry takes place.  

No 10 said new ethics adviser Sir Laurie Magnus will focus on Mr Zahawi’s ministerial declarations, but it could extend to his prior tax arrangement and whether he lied to the media when he dismissed reports about his financial affairs as ‘smears’.

Nadhim Zahawi’s political career was ‘hanging by a thread’ last night after it emerged he had failed to tell Rishi Sunak he was fined more than £1 million over a tax dispute

Rishi Sunak yesterday ordered an investigation into the tax settlement by Tory party chair Nadhim Zahawi, saying there were ‘questions that need answering’

A grim poll showed Mr Sunak’s personal ratings have tumbled over the past week, with Labour 22 points ahead

The row follows reports that Mr Zahawi agreed to pay a ‘penalty’ of more than £1 million as part of a £5million tax settlement with HM Revenue and Customs .

Allies of Mr Zahawi do not dispute that he was fined over the huge tax bill, but insist he had been ‘careless’ over his financial affairs rather than deliberately seeking to dodge tax. Mr Zahawi said yesterday he was ‘confident I acted properly throughout’.

The tax settlement relates to a stake in the polling firm YouGov, which he founded before entering politics. 

It was agreed during his brief stint as Chancellor last year – when he was in charge of the country’s tax system.

There are claims that the dispute resulted in Mr Zahawi being denied a knighthood in the New Year’s Honours list.

However, No10 said yesterday that Mr Sunak had not been informed of the row when he appointed Mr Zahawi as Conservative Party chairman in October.

Last week, the PM defended Mr Zahawi, telling MPs he had ‘addressed the matter in full’.

But No 10 yesterday revealed he had only learned that Mr Zahawi was fined by HMRC in media reports at the weekend.

Ms Nokes told Times Radio that Mr Zahawi was a ‘distraction’ and should stand aside during the probe for the good of the government.  

‘I think there are too many unanswered questions,’ she said.

‘The challenge for Nadhim is – look at the front pages, he’s leading too many of them.

‘When you become the story it’s a distraction from anything else that the government is trying to do.

‘There are countless examples of good, competent Cabinet colleagues who’ve got themselves in a mess, who have resigned quickly and come back, really in some instances just a few months later.

‘In order to get this cleared up Nadhim should stand aside and let the investigation run its course.’

A Cabinet source said Mr Zahawi had undermined the PM’s pledge to bring ‘integrity, professionalism and accountability’ to politics, adding that he was ‘finished’.

In a round of interviews, Mr Philp suggested that no-one in government knows the details of Mr Zahawi’s tax settlement.  

‘We’ve got this word ‘careless’ that has been put into the public domain,’ he said.

‘We don’t know exactly what it was that that carelessness represents.’

Pushed on the issue, the minister added: ‘You’re effectively inviting me to speculate on exactly what happened.

‘I don’t know exactly what happened, I don’t know what form that carelessness took and nor probably does anybody else apart from HMRC and Mr Zahawi. So let’s find out the facts.’

Mr Philp told BBC Breakfast: ‘I think it is reasonable that where there is an investigation, the person concerned is allowed to continue serving while that investigation continues.

‘We do have a principle, don’t we in this country, innocent until proven guilty. That applies to a whole range of different circumstances.

‘The investigation has been launched by the Prime Minister, that is the right thing to do. It will get to the bottom of this and then the Prime Minister will make his decision.

‘But I don’t think it is fair to jump to any conclusions before the investigation has concluded.’

Pushed on Ms Nokes’ call for Mr Zahawi to stand aside, the minister added: ‘I don’t take that view, I think we should let the investigation play out.’

Former No 10 communications director Sir Craig Oliver said the Tory chairman was ‘hanging on by a thread’.

Mr Sunak acknowledged that ‘clearly in this case there are questions that need answering’.

He added: ‘That’s why I’ve asked our independent adviser to get to the bottom of everything, to investigate the matter fully and establish all the facts and provide advice to me on Nadhim Zahawi’s compliance with the ministerial code. I’m pleased that Nadhim Zahawi has agreed with that approach and has agreed to fully co-operate with that investigation.’

Mr Sunak distanced himself from the decision to appoint Mr Zahawi as chancellor, saying it had taken place while he was out of government.

In July, Mr Zahawi, then running for the Tory leadership, told Sky News he was ‘clearly being smeared’ about his tax and insisted: ‘I’ve always declared my taxes, I’ve paid my taxes in the UK.’

Whitehall sources did not deny Mr Sunak was irritated by the emergence of further allegations about Mr Zahawi’s tax affairs.

Labour leader Sir Keir Starmer said Mr Zahawi’s position was ‘untenable’ and urged the PM to sack him.

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