Sir Laurie Magnus, the ethics adviser to the prime minister, did an investigation on Zahawi’s tax affairs. He found that Zahawi violated the rules by not telling officials that he was being investigated by the tax body when Boris Johnson made him chancellor. This was a “serious breach” of the code. He had also neglected to state formally that he had paid a settlement to HMRC for tax avoidance. He did not declare anything when he was appointed to cabinet roles by Liz Truss in September and when Sunak appointed him Tory chair and minister without portfolio in September.
Sunak sacks Zahawi
The investigation was initially requested by the PM after it was reported that Zahawi had paid a penalty payment to HMRC for past unpaid taxes. But after the investigation, Sunak came to the conclusion that Zahawi had shown “insufficient regard for the general principles of the ministerial code and the requirements in particular to be honest, open and an exemplary leader through his own behavior”.
Tax attorney Dan Neidle, who began looking into Zahawi’s finances last year, told BBC News that Zahawi had “set lawyers on me… he tried to shut me up.” “Regardless of what happened with the tax, his behavior… I feel, was a breach of the ministerial code,” he said.
Sir Laurie said that the MP had missed a number of chances to discuss his taxes in an honest way.
After reviewing the report, PM Sunak wrote to Zahawi, praising his work but informing him that he had made the difficult decision to dismiss him from the government. In a letter to Zahawi, Sunak said that the MP for Stratford-Upon-Avon could be “extremely proud of your wide-ranging achievements in government over the last five years.” He specifically mentioned Zahawi’s work supervising the Covid vaccine, asserting it was “critical to ensuring our country came through this crisis and saved many lives”.
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Then Sunak added saying, “Following the completion of the Independent Adviser’s investigation … it is clear that 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.”
Mr. Zahawi congratulated the prime minister and said he was proud of his involvement in the launch of the vaccination and the Queen’s burial. However, he did not apologize or address his tax issues. He swore to support the PM “from the backbenches in the coming years”.
Sunak faces criticize for Zahawi once again
For the past week and a half, the administration has been dealing with Nadhim Zahawi’s tax issues. Zahawi’s departure comes after a rough few weeks for Sunak. When he moved into No. 10, he promised that his government would have “integrity, professionalism, and accountability at every level.” However, there were growing calls to fire Zahawi over his tax problems.
Some Conservative lawmakers have questioned Prime Minister Sunak’s judgment for reappointing Zahawi. On the contrary, others have claimed that he should have fired Zahawi sooner after receiving Magnus’s report on Sunday morning. In his defense, Sunak cited the significance of a fair process. However, he has been called weak for not dismissing Zahawi sooner.
Sunak is also still being questioned on what he knew about the minister’s tax issues and when he knew them. There are rumors that he was warned that the government’s reputation could be at risk when he hired the minister in October. His deputy prime minister, Dominic Raab, is also being looked into because of claims of bullying.
Boris Johnson, the former prime minister, is facing a high-stakes investigation by the Commons privileges committee to see if he lied to parliament about the Partygate scandal.
Earlier in January, it was revealed that Zahawi had agreed to pay an estimated £5m in a settlement to HMRC, prompting a barrage of questions from parliamentarians and journalists.
The debate over Sunak’s “commendable” or “delayed” action
Michael Portillo, a former member of the Conservative cabinet, praised Sunak for his “commendable” desire to follow procedure. However, he told GB News, “This thing has been in the headlines now for days and days and it’s been doing terrible damage to the government, to him, and to the party.
“I think he did have an opportunity to get rid of him earlier. So I think the prime minister will face some criticism for having taken so long … It pains me to say this, but I think on the whole it makes Rishi look weak,” he added.
David Cameron’s director of communications at No 10, Sir Craig Oliver, tweeted: “The PM finally reaches the obvious and inevitable conclusion by sacking Nadhim Zahawi. Rishi Sunak knew nothing this morning that he didn’t know a week ago – he will be lamenting feeling unable to stand up to some backbenchers; instead more damage to the Conservatives brand.”
However, Labour deputy leader Angela Rayner said, Zahawi should have been fired “long ago” and called the prime minister “hopelessly weak.”
The record of the tax probe
In April 2021, HMRC opened an investigation into Zahawi, which included a June 2021 meeting with the minister and his advisors. When queried by the ethics adviser about his tax returns, Zahawi said he “formed the impression” that he was being just questioned about his tax issues. Magnus countered that Zahawi should have known that the investigation on him was serious.
After being appointed chancellor by Johnson on July 5, 2022, the minister did not inform the permanent secretary of the Treasury about the HMRC probe. Even though the investigation had been going on for over a year by that point, Zahawi did not revise his declaration until July 15, 2022.
Zahawi violated the ministerial code twice: once in September when he was appointed to Liz Truss‘ cabinet. Again in October, when he was appointed to Sunak’s cabinet, by failing to report that he had paid a penalty for tax avoidance.
Zahawi published a statement the day after his HMRC penalty was revealed, stating the tax authority had determined it was a “careless but not deliberate error.” However, his response raised as many questions as it answered, and cast doubt on previous statements. It includes his promise in July that his taxes were “fully paid and up to date,” and letters from advisors threatening lawsuits against journalists who said this was maybe not the case.
He settled with HMRC in August 2022. But the media didn’t report on it until January of this year, revealing that he had paid a penalty to HMRC. Then the prime minister instructed Sir Laurie, to investigate Mr. Zahawi’s tax filings on January 23rd, 2023.