Zahawi brushes off calls to resign over 'million pound tax fine', claiming his error was 'careless, not deliberate'
21 January 2023, 14:21
Nadhim Zahawi said a mistake he made over tax was careless and not deliberate, after being made to pay a "million pound fine" to the taxman.
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Labour has called for the former Chancellor to be sacked from his Cabinet job after news his fine emerged.
But Mr Zahawi said in a statement on Saturday aimed at addressing what he described as "confusion" over his tax affairs that "all his tax affairs were up to date" by the time of his appointment by the Prime Minister.
"Twenty-two years ago, I co-founded a company called YouGov," he added. "I'm incredibly proud of what we achieved. It is an amazing business that has employed thousands of people and provides a world-beating service.
"When we set it up, I didn't have the money or the expertise to go it alone. So I asked my father to help. In the process, he took founder shares in the business in exchange for some capital and his invaluable guidance. Twenty-one years later, when I was being appointed chancellor of the exchequer, questions were being raised about my tax affairs. I discussed this with the Cabinet Office at the time."
"Following discussions with HMRC, they agreed that my father was entitled to founder shares in YouGov, though they disagreed about the exact allocation. They concluded that this was a 'careless and not deliberate' error.
"So that I could focus on my life as a public servant, I chose to settle the matter and pay what they said was due, which was the right thing to do.
"Additionally, HMRC agreed with my accountants that I have never set up an offshore structure, including Balshore Investments, and that I am not the beneficiary of Balshore Investments.
"This matter was resolved prior to my appointments as chancellor of the duchy of Lancaster and subsequently chairman of the party I love so much. When I was appointed by the Prime Minister, all my tax affairs were up to date."
Mr Zahawi was accused of paying a penalty as part of a multi-million pound settlement with HMRC.
The former Chancellor, who attends Rishi Sunak's Cabinet, has been under pressure since it was reported that he paid a seven-figure sum to end a dispute.
The Guardian reported that he paid a 30% penalty, taking the estimated total to more than £4.8 million.
Labour said his position was "untenable" and the prime minister must sack him.
Caller slams Tory PMs and Chancellors past and present amid the row over Nadhim Zahawi's tax affairs
Deputy Labour leader Angela Rayner said: "Rishi Sunak promised a Government of integrity, professionalism, and accountability but instead he's propping up a motley crew of scandal-ridden ministers.
"Nadhim Zahawi's story doesn't add up. The position of the man who was until recently in charge of the UK's tax system and who this Prime Minister appointed Conservative Party chair is now untenable.
"It's time for Rishi Sunak to put his money where his mouth is and dismiss Nadhim Zahawi from his Cabinet."
Michael Gove: Nadhim Zahawi has paid all his taxes - that's a good thing
A spokesman for Mr Zahawi has previously said his taxes are "properly declared and paid in the UK" and the minister "has never had to instruct any lawyers to deal with HMRC on his behalf".
Mr Sunak also defended his ally, telling Prime Minister's Questions on Wednesday that Mr Zahawi "has already addressed this matter in full and there's nothing more that I can add".
The Prime Minister's press secretary said Mr Zahawi "has spoken and been transparent with HMRC".
On whether Mr Sunak believes the matter is now closed, she said: "I don't know whether the Prime Minister has reviewed it in full, but I do know that he takes Nadhim Zahawi at his word."
