Rishi Sunak is under pressure to sack Nadhim Zahawi from Cabinet after it was claimed the former chancellor paid a penalty of more than £1m to settle a probe into his tax affairs.
The Conservative Party chairman has faced mounting questions over his personal payments to HMRC, but the prime minister has so far stood by him.
Some senior Tories now believe it is impossible for Mr Zahawi to continue in his job, with one describing the situation as “unsustainable”.
Rishi Sunak has now asked his independent ethics adviser to look into the case, as “clearly there are questions that need answering”.
The revelation that Mr Zahawi was forced to pay the penalty – part of a reported total tax settlement of almost £5m – comes as The Independent revealed how he tried to gag this newspaper from revealing that he was being investigated by the National Crime Agency and HMRC last year.
Mr Zahawi repeatedly said he had paid “all due taxes” and would take legal action if we reported that he had been investigated – but The Independent ignored his threats and published two reports.
You can read the full exchange below.
Mr Zahawi, we have had it confirmed that your finances were investigated by NCA going back to 2019 (and are informed) they raised this matter with senior Whitehall figures.
Can you respond?
Can you give details?
Did you inform PM and Treasury of this when you accepted the job of chancellor?
Does this affect your ability to do your new job as chancellor?
Can you give assurances that you have paid all due UK taxes and obeyed all financial laws and regulations?
There was no such investigation by NCA. I have paid all due taxes and obeyed all financial laws and regulations.
We have spoken to a senior source who was approached by the NCA about it formally in 2019.
I would know if the NCA had investigated me. Right?
Are you adamant that the NCA never told you? Our source has a very clear memory of being approached by them formally and told they were looking at your finances.
One hundred per cent I will take legal action. I can confirm that the NCA never approached me/told me anything ever in my career.
We have spoken to someone who was involved in the matter. There definitely was an NCA inquiry.
We are reliably informed it was the International Corruption Unit of the NCA (and it) started in 2020. SFO also involved. (We understand that) Whitehall figures were informed at the time (and that) Boris Johnson was aware.
Was it raised with you by him or anyone else when he appointed you chancellor? Has it ever been raised with you?
Have you been informed since taking over as chancellor that NCA and HMRC have been investigating your tax affairs?
You said yesterday you did not know about this. Are you certain?
Are you aware that Boris Johnson, Priti Patel and Cab Office were briefed on this in 2020?
How can a chancellor take charge of tax when he has been investigated for possible tax avoidance? We believe the investigation is still live.
Can you respond?
We plan to (publish) a story stating that the NCA SFO and HMRC have all been involved in investigating your finances/taxes since 2020. And that they briefed No 10, Cab Off and Home Off on this. We have had this information confirmed.
Can you reply to the following?
Has the HMRC now informed you of this?
Doesn’t it present a conflict of interest?
Will you make your tax declarations public?
I will take legal action.
We have asked you straightforward questions based on reliable information on the grounds of a clear public interest.
Can you respond please?
I have responded to you. I repeat I will take legal action.
It is normal practice to ask a politician for a response to serious questions in the public interest so it can be weighed up prior to publication. It is reasonable to expect a considered reply.
We have also established that HMRC inquiry into your tax affairs was carried out by their tax fraud investigators and that the investigation is unresolved.