Mega-rich Tory chairman Nadhim Zahawi agreed to pay nearly £5 million to settle a tax dispute after being hit with a 30% penalty, it is claimed.
Labour have demanded Mr Zahawi is sacked after new details about the penalty were reported - with an expert saying the sum suggests the MP may have admitted "carelessness".
His financial affairs have been under scrutiny for weeks after the dispute with HMRC came to light.
The former Chancellor, who attends cabinet, faces calls for an inquiry, with Labour deputy leader Angela Rayner demanding Rishi Sunak dismisses him.
It came after critics highlighted a family trust based in the tax haven of Gibraltar, which held millions of pounds worth of shares in the YouGov polling firm Mr Zahawi co-founded in 2000.
A source told The Guardian that the top Tory owed around £3.7 million in capital gains tax after selling shares worth more than £20 million.
It is claimed that HMRC imposed a 30% penalty on top of this - meaning he had to cough up an estimated £4.8 million. Interest on this is likely to push the total sum above £5 million, The Guardian reports.
Ms Rayner said: "Rishi Sunak promised a Government of integrity, professionalism, and accountability but instead he's propping up a motley crew of scandal-ridden ministers.
"Nadhim Zahawi's story doesn't add up. The position of the man who was until recently in charge of the UK's tax system and who this Prime Minister appointed Conservative Party Chair is now untenable.
"It's time for Rishi Sunak to put his money where his mouth is and dismiss Nadhim Zahawi from his Cabinet."
Tax lawyer Dan Neidle has been working to expose the minister's tax affairs and has estimated that he owed £3.7 million.
Mr Neidle, of the Tax Policy Associates thinktank, told PA news agency "you don't pay a 30% penalty if your tax affairs are in order".
"You do it, at best, if you've been careless if you haven't paid tax that's due," he said.
The lawyer said the chances Mr Zahawi had paid a penalty were "almost inevitable" after the Sun on Sunday reported that he had settled a seven-figure sum with HMRC.
Asked about the level of the reported penalty, Mr Neidle said: "It probably means that at least he didn't admit to deliberate behaviour, it probably means he admitted to carelessness."
Labour has called for an inquiry into Mr Zahawi and deputy leader Angela Rayner urged HMRC to clear up the "serious questions raised about a potential conflict of interest".
According to the government website, a penalty of up to 30% is due if it arises because of a lack of reasonable care. A deliberate error can incur a penalty of between 20 and 70%.
It is alleged Mr Zahawi avoided tax by using an offshore company registered in Gibraltar to hold shares in YouGov.
YouGov's 2009 annual report showed a more than 10% shareholding by the Gibraltar-registered Balshore Investments Ltd.
The report described the company as the "family trust of Nadhim Zahawi". At the time he was an executive director of the polling firm.
Ms Rayner said: "If HMRC has applied a 30% penalty in this case, the British people deserve to know why, yet the Conservative Party chair is maintaining a deafening silence.
"It's quite clearly a matter of public interest to know if the man who was, until recently, in charge of the UK tax system has accepted a fault or been subjected to a penalty to settle his own tax bill.
"Rishi Sunak must explain what he knew about this, and why he appointed Nadhim Zahawi to his Cabinet."
A spokesman for Mr Zahawi has previously said his taxes are "properly declared and paid in the UK" and the minister "has never had to instruct any lawyers to deal with HMRC on his behalf".
Mr Sunak has defended his ally, telling MPs at PMQs on Wednesday that Mr Zahawi "has already addressed this matter in full and there's nothing more that I can add".
The Prime Minister's press secretary said Mr Zahawi "has spoken and been transparent with HMRC".
On whether Mr Sunak believes the matter is now closed, she said: "I don't know whether the Prime Minister has reviewed it in full, but I do know that he takes Nadhim Zahawi at his word."
The Mirror has contacted Conservative HQ and Mr Zahawi's team for comment.
