Prime minister sacks Stratford MP Nadhim Zahawi after 'serious breach' of ministerial code

STRATFORD MP Nadhim Zahawi has been sacked as chairman of the Conservative Party.

Prime minister Rishi Sunak said that the findings of an independent investigation into the multi-millionaire’s tax affairs had concluded there was a serious breach of the ministerial code.

In a letter to Mr Zahawi, released today (Sunday), Mr Sunak wrote: “Following the completion of the independent advisor’s investigation – the findings of which he has shared with us both – it is clear 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.”

The future of Mr Zahawi as a senior political figure had been hanging by a thread after the investigation into his tax affairs was ordered by the PM while some Conservative colleagues called for him to either resign or step aside until the investigation was completed.

The inquiry, led by ethics adviser Sir Laurie Magnus, was completed quicker than most people expected – and concluded there had been a breach of the ministerial code.

Sir Laurie reported: 'As a result of my inquiries, I conclude that Mr Zahawi failed to update his declaration of interest form appropriately after this settlement [with HMRC] was agreed in principle in August 2022.

'It was not until mid-January 2023 that details of the earlier HMRC investigation and its outcome were declared.

'I also conclude that, 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.'

The report adds: ‘I consider that an HMRC investigation of the nature faced by Mr Zahawi would be a relevant matter for a minister to discuss and declare as part of their declaration of interests. I would expect a minister to inform their permanent secretary and to seek their advice on any implications for the management of their responsibilities. I would likewise expect a minister proactively to update their declaration of interests form to include details of such an HMRC process.’

The report also looks at Mr Zahawi’s short time as chancellor last summer. It adds: ‘Mr Zahawi completed a declaration of interests form which contained no reference to the HMRC investigation.

‘A later form acknowledged (by way of an attachment) that Mr Zahawi was in discussion with HMRC to clarify a number of queries. Only following receipt of HMRC's letter received on 15th July 2022 did Mr Zahawi update his declaration of interests form to acknowledge that his tax affairs were under investigation, but he provided no further details other than the statement made previously that he was clarifying queries.’

Mr Zahawi, who was also minister without portfolio, had faced a barrage of criticism since it was revealed he’d been forced to pay a penalty of over £1 million to HMRC as part of a tax bill of around £5m. He said the tax error had been “careless and not deliberate”.

On Friday (26th January) the chief executive of HM Revenue & Customs told MPs there are “no penalties for innocent errors” when he was asked about Mr Zahawi’s tax issues.

Jim Harra, told the Public Accounts Committee: “Carelessness is a concept in tax law. It can be relevant to how many back years that we can assess, can be relevant to whether someone is liable to a penalty and, if so, what penalty they will be liable to for an error in their tax affairs.

“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.”

Mr Sunak had originally backed Mr Zahawi as his party’s chairman but, when new information about the dispute with HMRC came to light, ordered an investigation.

At PMQs on Wednesday he resisted pressure to sack Mr Zahawi, saying he would await the outcome of the report. The PM obviously did not like the report’s conclusions.

The row – and the media storm – surrounding Mr Zahawi centred on a tax bill over the sale of shares in YouGov, the polling firm he co-founded – worth an estimated £27 million.

Shares were held by Balshore Investments, a company registered offshore in Gibraltar and linked to Mr Zahawi’s family.

Mr Zahawi had said he did not benefit from Balshore and was confident he had “acted properly throughout”.

Mr Sunak’s letter to Stratford’s MP thanked him for his achievements in government, highlighting his work with the Covid-19 vaccines rollout.