Taxing questions for ministers as pressure over Zahawi row grows

Rishi Sunak is under growing pressure to sack Nadhim Zahawi as the row over the former chancellor’s tax affairs threatens to pull in other members of the cabinet.

The chancellor Jeremy Hunt was forced to say he had never paid a penalty to the taxman following reports Mr Zahawi was fined around £1million.

Asked the same question a number of other cabinet ministers declined to comment as Conservative unrest about the party chairman spread. On Mr Zahawi, Philip Hammond, who was chancellor under Theresa May, said he “would not have felt able” to take the job if “I was currently engaged in a tax dispute with HMRC. That just isn’t right.”

Initially Mr Hunt had resisted talking about his personal tax affairs, saying he did not think ordinary people were “remotely interested”.

But shortly afterwards he backtracked conceding that “I am chancellor, so for the record I haven’t paid an HMRC fine”.

A similar U-turn ocurred on Wednesday when Downing Street initially refused to say whether or not Rishi Sunak had paid a penalty, describing his tax affairs as “confidential”, before clarifying that he had not.

Sources close to a number of other cabinet ministers, including Michael Gove and James Cleverly, declined to comment .

But tax experts warned the fallout from the Zahawi row risked driving “good people out of politics”.

Dan Neidle, from Tax Policy Associates Ltd, said he was uncomfortable Mr Hunt has been questioned on the issue and also drew a distinction between those who paid larger sums and those who may have paid a £100 late filing penalty to HMRC.

Mr Neidle, like the Independent, faced legal threats from Mr Zahawi last summer while inquiring about his tax affairs.

As the pressure mounted on Mr Zahawi, former Conservative chancellor Ken Clarke suggested that he may not “be allowed to wait” for the outcome of the investigation ordered into his conduct.

Scottish first minister Nicola Sturgeon also questioned why Mr Zahawi was prolonging the “agony” by keeping Mr Zahawi in his cabinet.

Overnight, senior Tory MP Sir Jake Berry said it was “unsustainable” for Mr Zahawi to remain in position.

The prime minister has ordered an investigation into Mr Zahawi, the Conservative Party chairman, after it emerged he settled a multimillion-pound tax dispute while chancellor.

Mr Zahawi has now authorised HMRC to discuss his settlement – estimated to be around £4.8 million and include a penalty – with the lead investigator Sir Laurie Magnus.

Pressure on the former chancellor grew after HMRC boss Jim Harra told MPs on Thursday that there were “no penalties for innocent errors in your tax affairs”.

Asked after a speech in London, Mr Hunt said he would not talk about his own taxes adding “but I don’t think there’s anything you’d find interesting to write about, if I can put it that way”.

Asked a second time he said “I don’t think people at home are remotely interested in personal tax affairs” and instead suggested they cared about the government’s five priorities, which include cutting hospital waiting lists.

Mr Sunak conceded on Wednesday that it would have been “politically expedient” to sack Mr Zahawi, but said he would “await the findings” of the investigation into whether Mr Zahawi broke the ministerial code.

More than a week ago, Mr Sunak told MPs at Prime Minister’s Questions that Mr Zahawi had addressed his tax affairs “in full”.

But within days he had launched investigation by Sir Laurie, his independent ethics adviser, admitting there were “questions that need answering” after the tax penalty was revealed.

Mr Sunak has insisted that “no issues were raised with me” when he appointed Mr Zahawi to his current role.

Labour and other senior Tories including Caroline Nokes have called on Mr Sunak to remove Mr Zahawi either permanently or temporarily.

Mr Zahawi has not denied reports in the Guardian that his was around 30 per cent of the settlement.

Sir Jake, Mr Zahawi’s predecessor as party chairman, has called on him to step aside while under investigation so the public could have faith in the process.

The former minister told BBC Question Time that Mr Zahawi was a “friend”.

But, he added: “The government needs to find a mechanism for ministers and MPs who are under investigation in this way to step aside, to clear their name, and then to come back into government if that is appropriate.

“I think from Nadhim – great individual that he is – that would be the right thing to do now.”

He added: “I do think it’s unsustainable for a minister to stay in this post while this investigation goes on.”