Rishi Sunak ‘didn’t know’ Nadhim Zahawi paid penalty to settle tax dispute

Prime minister’s official spokesman said “additional facts” had been placed in the public domain over the weekend by former Tory chair

Rishi Sunak didn’t know last week that former chancellor Nadhim Zahawi had paid a penalty to settle his tax dispute, Downing Street has said.

The Tory party chair – who previously claimed reports of HMRC inquiries into his taxes were a “smear” – admitted on Saturday he had settled a dispute – reportedly to be an estimated £4.8m, including a 30 per cent penalty of around £1m.

Referencing those revelations on Monday, the prime minister’s official spokesman said that “additional facts” had been placed in the public domain over the weekend by Mr Zahawi.

“As you heard from the prime minister this morning, he thinks it’s right because of this to ask his independent adviser to establish the facts,” he added.

Mr Sunak told 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”.

But pressed on whether Mr Sunak knew then that Mr Zahawi had paid a penalty to HMRC, the spokesman said: “That’s not my understanding.”

Mr Sunak on Monday ordered the probe into Mr Zahawi, who still attends cabinet, saying there were “clearly questions that need answering”.

The investigation could look at threats of legal action against those looking into his affairs revealed by The Independent, No 10 indicated.

But it will not reveal how much Mr Zahawi was made to pay the taxman, despite reports it totalled millions of pounds.

Labour’s deputy labour leader Angela Rayner will use an urgent question in the Commons on Monday afternoon to demand answers from the government about the situation.

Despite the inquiry, Downing Street insisted that Mr Sunak still had “confidence” in Mr Zahawi.

Nadhim Zahawi said on Monday that he was confident he had done nothing wrong (PA Wire)

The investigation into Mr Zahawi by ethics adviser Sir Laurie Magnus will focus on ministerial declarations but could extend to whether his tax arrangements were appropriate, Downing Street said.

No 10 also suggested they could look at whether Mr Zahawi lied to the media, the official said: “The adviser is able to look more widely if they see fit.”

Asked specifically if Mr Sunak would expect Sir Laurie to look at legal threats against those looking into his affairs, the spokesman said: “He’s looking at potential breaches of the ministerial code relating to ministerial declarations in the first instance but he does have the ability to look at other issues if he thinks they are relevant.”

Asked the prime minister’s opinion on the use of legal threats in this case, he said: “The prime minister thinks that it is right that the government acts with integrity and accountability. That is important to him”.

Mr Zahawi will remain party chairman while the inquiry is happening.

On a visit to a hospital in Northamptonshire, the PM told reporters: “Integrity and accountability is really important to me and clearly in this case there are questions that need answering.”

“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,” Mr Sunak added.

Prime Minister Rishi Sunak has said he cannot wave a magic wand to resolve the NHS pay dispute (Toby Melville/PA) (PA Wire)

Asked whether Mr Zahawi should not stand down during the investigation, Mr Sunak said: “As is longstanding practice, he will continue to play the role he does.”

Mr Zahawi welcomed the investigation and said “I am confident I acted properly throughout” after admitting at the weekend had settled a dispute with the HMRC over a “careless” error.

Labour’s deputy leader Angela Rayner responding to the fact that Mr Zahawi still has Mr Sunak’s confidence said: “This pathetic attempt to pass the buck is simply not good enough. Nadhim Zahawi was chancellor of the exchequer while he hadn’t paid his tax and was negotiating a settlement with HMRC at the time. You don’t need an ethics adviser to tell you that’s unacceptable.“The prime minister made the decision to appoint Nadhim Zahawi as a government minister and Conservative Party chair.

Mr Sunak’s vote of confidence in Mr Zahawi is yet another example of his weak leadership and appalling judgement. He can no longer dodge questions about what he knew and when, or why warnings were ignored.

“It’s his responsibility as prime minister to ensure his cabinet’s tax affairs are up-to-date and in order, but he’s too compromised to do his job and failing to deliver the integrity, professionalism and accountability he promised. Rishi Sunak must get a grip and dismiss Nadhim Zahawi from his Cabinet immediately.”