Conservative party chairman Nadhim Zahawi should resign now to end the “distraction” of his multimillion-pound tax error, former Tory minister Caroline Nokes has said.
Rishi Sunak has ordered an investigation in Mr Nadhim’s tax affairs after it emerged that the PM was kept in the dark about his cabinet minister paying a penalty to settle a tax dispute with HMRC.
But Ms Nokes said Mr Zahawi should “stand aside” before the probe concludes because the controversy was becoming too damaging for the government.
“In order to clear this up, Nadhim should stand aside and let the investigation run its course,” the senior Tory told TalkTV. “Once you are the story you have to go. I genuinely think this is too much of a problem, for him, for the prime minister.”
The former equalities minister said Mr Zahawi had left “too many unanswered questions”, adding: “There are countless examples of good, competent cabinet colleagues who have got themselves in a mess, who have resigned quickly and come back in some instances a few months later.”
Senior Tory MPs have told The Independent the under-fire minister’s position as Tory chair is “untenable” and he is “unlikely” to survive – saying it was impossible for him to represent in the government in the media.
Backbenchers are also getting anxious. One Tory MP told The Independent it was getting “tiresome” to try to account for the Tory chairman’s behaviour, adding that the pressure on Mr Zahawi “will not go away”.
One former cabinet minister told the Financial Times: “This is fatal for Nadhim, he’s toast.”
The former chancellor dismissed reports of an HMRC review into his taxes – first revealed by The Independent last year – as a “smear”, but on Saturday he admitted he had settled a dispute and paid a penalty understood to be around £1m.
The investigation by ethics adviser Sir Laurie Magnus is also expected to look at threats Mr Zahawi made against those looking into his tax affairs – including The Independent – and whether his denials were accurate.
No 10 indicated that Mr Sunak did not know the former chancellor paid a penalty to settle the case until “additional facts” were placed in the public domain by Mr Zahawi at the weekend.
Home Office minister Chris Philp said the prime minister was told there were “no outstanding issues” in relation to Mr Zahawi’s tax affairs when appointing him Tory chair and making him a cabinet minister in the autumn.
Asked he could say with a straight face that this was a government of “integrity”, Mr Philp told Times Radio: “Yes, I can,” arguing that the PM had acted “quickly and decisively” on the matter.
Asked about Ms Nokes call for his resignation, Mr Philp said it was “reasonable” for Mr Zahawi to stay on as Tory chair while the investigation takes place. “We do have a principle, don’t we in this country – innocent until proven guilty,” he told BBC Breakfast.
But Labour’s shadow foreign secretary David Lammy said that a former chancellor of “any previous government” in the same situation would have “stepped down or resigned or would have been sacked”.
Mr Lammy questioned why there should be “another rule” for Nadhim Zahawi when it comes to paying taxes. Speaking to Times Radio, Mr Lammy said: “I just think it’s unacceptable.”
Mr Zahawi has not yet disclosed the size of the HMRC settlement – reportedly an estimated £4.8m, including a 30 per cent penalty of around £1m. But his spokesman has not denied the reported sums.
The Cabinet Office’s propriety and ethics team raised issues around Mr Zahawi’s tax affairs directly with Boris Johnson before he made him chancellor, ITV News has reported.
Ms Nokes said Mr Johnson bore some responsibility for the current mess. “I would lay part of the problem at Boris Johnson’s door,” she said. “This is a legacy problem – it’s a hangover from the prime minister past that needs to be put to bed.”
Despite the probe, an ally of Mr Zahawi said on Monday that the former chancellor “absolutely” will not be quitting in the face of growing pressure over his settlement.