Former Tory leader urges Nadhim Zahawi to 'clear up' questions over tax affairs

Former Tory leader Sir Iain Duncan Smith has urged Nadhim Zahawi to release the full details amid the row over his tax affairs – as the embattled party chairman fights for his political survival.

Labour has called for the cabinet minister to be sacked after he admitted paying a settlement to HMRC following a tax error related to a shareholding in YouGov.

Mr Zahawi released a statement on Saturday to “address some of the confusion about my finances”, but it raised further questions, including whether he negotiated the dispute while he was serving as chancellor in the closing days of the Johnson administration.

On Sunday morning, Foreign Secretary James Cleverly told Sky’s Sophy Ridge on Sunday programme he didn’t know anything more about the situation than what was in his colleague’s statement.

“I’m not an investigator,” he said when it was put to him that he was there to speak on behalf of the government.

Mr Zahawi has not disclosed the size of the settlement – reported to be an estimated £4.8m including a 30% penalty – or confirm whether he paid a fine.

Asked whether he should reveal this information, Mr Cleverly said: “People’s taxes are private matters. I know that as politicians we, quite rightly, are expected to have a higher level of disclosure than perhaps other people might do.

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“Nadhim has issued a statement where he has admitted that he made a careless error, this is now resolved.”

However, senior backbencher and former Tory leader Sir Iain took a different view.

“The sooner you can get the facts out the better, rather than have them coming out in phases,” he told the BBC’s Sunday with Laura Kuenssberg show.

“I would say to him, get it all out now, whatever you have to do, and clear it up.”

He added: “I don’t believe he is deceitful in any way.”

Reports about Mr Zahawi’s tax affairs began emerging when he was appointed chancellor by Mr Johnson last summer.

He denied allegations that he avoided tax by using an offshore company registered in Gibraltar to hold shares in the YouGov polling company he co-founded.

Questions swirled following an article in The Sun on Sunday last week, which claimed a seven-figure payment was made by Mr Zahawi to end a dispute with the taxman “after scrutiny of his family’s financial affairs”.

In his statement last night, Mr Zahawi said his father took founder shares in YouGov and that HMRC later “disagreed about the exact allocation”, leading him to “settle the matter and pay what they said was due”.

Mr Zahawi said he made a “careless and not deliberate error”, but opposition parties have demanded an independent investigation as well as the publication of all of Mr Zahawi’s correspondence with HMRC.

‘Difficult’ to see how Zahawi will survive

Asked whether Mr Zahawi will survive in his role until Prime Minister’s Questions on Wednesday, Mr Cleverly said: “What else am I going to say other than yes, because he’s a very, very effective minister.”

But Labour’s shadow chief secretary to the Treasury cast doubt on this.

Pat McFadden said: “It’s difficult for Mr Zahawi because the problem with this is what we’re being asked to believe.

“We’re being asked to believe that he had this asset worth £27m that he didn’t really know was his, and therefore didn’t really know tax was due on it.”

He said that “maybe all politicians” should publish their tax returns – a view shared by former shadow chancellor John McDonnell.

‘Test’ for Rishi Sunak

Mr McFadden also said the matter is a “test” of Mr Sunak’s promise to turn a new leaf after Boris Johnson’s scandal-plagued premiership, suggesting his pledge would be undermined “if this is just shrugged off”.

It is not clear what the prime minister knew when he appointed Mr Zahawi as party chairman.

Mr Cleverly suggested the PM does not discuss ministers’ “external affairs” during appointments and that it is the Cabinet Office’s role to conduct due diligence on his behalf.

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