Prime minister Sunak has asked his ethics adviser to look into whether Mr Zahawi’s conduct breached the ministerial code which, in essence, asks whether the minister potentially was less than transparent when addressing questions on his tax affairs.
Dan Neidle of Tax Policy Associates became aware of the potential story back in June 2022, following a freedom of information request asking whether any government ministers were under HMRC enquiry. The focus of attention since then has been on the tax treatment of a disposal of shares in YouGov, which was jointly founded by Zahawi in 2000 – particularly around whether an offshore structure was used to avoid capital gains tax. Neidle suggested that, had the share sale been liable for CGT in the UK, it would have raised some £3.7m for the exchequer.
A report in The Sun on Sunday in January 2023 breathed further life into the story, alleging that Zahawi had reached a settlement with HMRC to pay several million pounds, with further media reports that the settlement included a late-payment penalty and interest. In a statement, Zahawi sought to address some of the ‘confusion’ around his finances, saying that there had been disagreement with HMRC around the exact allocation of YouGov shares, with HMRC concluding this had been a ‘careless and not deliberate error’. The statement continues: ‘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.’
The Guardian alleges that Zahawi resolved the matter at some point between being appointed as chancellor and moving to become chair of the Conservative Party, potentially implying that the settlement was reached with HMRC while he was chancellor, creating an obvious conflict of interest.
With the Number 10 ethics investigation into Zahawi ongoing, the political future for the former chancellor remains uncertain. As one tabloid put it on Tuesday, ‘you don’t need a lettuce to see how this one ends’.
Prime minister Sunak has asked his ethics adviser to look into whether Mr Zahawi’s conduct breached the ministerial code which, in essence, asks whether the minister potentially was less than transparent when addressing questions on his tax affairs.
Dan Neidle of Tax Policy Associates became aware of the potential story back in June 2022, following a freedom of information request asking whether any government ministers were under HMRC enquiry. The focus of attention since then has been on the tax treatment of a disposal of shares in YouGov, which was jointly founded by Zahawi in 2000 – particularly around whether an offshore structure was used to avoid capital gains tax. Neidle suggested that, had the share sale been liable for CGT in the UK, it would have raised some £3.7m for the exchequer.
A report in The Sun on Sunday in January 2023 breathed further life into the story, alleging that Zahawi had reached a settlement with HMRC to pay several million pounds, with further media reports that the settlement included a late-payment penalty and interest. In a statement, Zahawi sought to address some of the ‘confusion’ around his finances, saying that there had been disagreement with HMRC around the exact allocation of YouGov shares, with HMRC concluding this had been a ‘careless and not deliberate error’. The statement continues: ‘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.’
The Guardian alleges that Zahawi resolved the matter at some point between being appointed as chancellor and moving to become chair of the Conservative Party, potentially implying that the settlement was reached with HMRC while he was chancellor, creating an obvious conflict of interest.
With the Number 10 ethics investigation into Zahawi ongoing, the political future for the former chancellor remains uncertain. As one tabloid put it on Tuesday, ‘you don’t need a lettuce to see how this one ends’.
