Rishi Sunak faces mounting pressure to take decisive action against Nadhim Zahawi, as the focus on the Conservative party chair’s finances started to shift to the prime minister’s own tax situation.
After a bruising prime minister’s questions in which Keir Starmer labelled Sunak “hopelessly weak”, the PM’s press secretary initially refused to say whether Sunak had, like Zahawi, ever paid a tax penalty to HMRC, saying this was “confidential”.
Hours later, No 10 released a brief statement saying Sunak “has never paid a penalty to HMRC”.
Sunak is seen as particularly vulnerable over tax issues after it emerged last year that his wife, Akshata Murty, claimed non-domiciled status to avoid paying millions of pounds in tax on dividends from her family’s IT empire.
At PMQs, Sunak avoided a question from Starmer about Zahawi paying a tax penalty connected to the sale of shares in YouGov, the polling company he co-founded, while he was chancellor under Boris Johnson.
The Labour leader responded by openly taunting Sunak: “We all know why the prime minister was reluctant to ask his party chair questions about family finances and tax avoidance.”
The SNP’s Westminster leader, Stephen Flynn, joined the mockery with a question referencing Sunak’s tax history, as well as Zahawi’s, and allegations that Richard Sharp helped secure Johnson a loan before being appointed BBC chair.
“What advice would he have for individuals seeking to protect their personal finances?” Flynn asked. “Should they seek out a future chair of the BBC to help secure an £800,000 loan? Should they set up a trust in Gibraltar and hope that HMRC simply don’t notice? Or should they do as others have done, and simply apply for non-dom status?”
On Monday Sunak asked his ethics adviser, Laurie Magnus, to investigate the allegations against Zahawi.
On Wednesday, a series of senior Tory figures joined those calling for Zahawi to step aside, at least until Magnus has finished his inquiry, which it is thought could take little more than a week.
The veteran Tory backbencher Nigel Mills said even if Magnus exonerated Zahawi this would not be the end of the matter.
“I think the only way to resolve this is to make clear what the situation was that gave rise to a significant penalty,” the Amber Valley MP told the BBC. “If that can be explained we can all move on. If it can’t, then clearly his position won’t be tenable.”
Another MP, the trade minister Andrew Bowie, said that if Magnus found Zahawi had breached the ministerial code, Sunak would “of course sack him” – even though the prime minister’s press secretary said this was not necessarily the case.
Two party grandees, the peer Robert Hayward and former MP and cabinet minister David Gauke, also called on Zahawi to move aside, even temporarily. Gauke told the BBC: “It’s hard to see how this doesn’t ultimately end in his resignation.”
Sunak has repeatedly sought to distance himself from Zahawi’s tax affairs. On Wednesday he told MPs the tax settlement “occurred before I was prime minister”, and that he thus had not been told about it when he made Zahawi party chair and minister without portfolio, a cabinet post, in October.
Asked about the issue a week before at PMQs, Sunak gave assurances that Zahawi had “addressed the matter in full” – three days before Zahawi issued a statement effectively confirming the penalty to HMRC.
Challenged by Starmer on this, Sunak replied: “Since I commented on this matter last week, more information has come forward.”
Sunak pushed back against calls for him to sack his party chair, saying he believed in allowing due process to be followed rather than opting for “the politically expedient thing to do”.
But in a withering final question, Starmer said Sunak’s failure to act on Zahawi “shows how hopelessly weak he is”, adding: “He can’t even deal with tax avoiders in his own cabinet. Is he starting to wonder if this job is just too big for him?”
