Rishi Sunak has suggested it would have been “politically expedient” to sack Nadhim Zahawi but insisted that “due process” means the investigation into his tax affairs should be allowed to reach its conclusion.
The Prime Minister acknowledged that he had not been given the full picture about the Tory chairman’s financial matters when he told MPs last week that Mr Zahawi had given a “full” account.
But he insisted that when he entered No 10 and gave Mr Zahawi the job of Minister Without Portfolio “no issues were raised with me”.
At Prime Minister’s Questions, Mr Sunak was challenged over Mr Zahawi’s tax affairs for the second week running.
The PM said: “Of course, the politically expedient thing to do would be for me to have said that this matter must be resolved by Wednesday at noon.
“But I believe in proper due process.”
Mr Sunak has ordered an investigation by Sir Laurie Magnus, his independent adviser on ministers’ interests, into whether Mr Zahawi broke ministerial rules over the estimated £4.8 million bill he settled with HM Revenue and Customs (HMRC) while he was chancellor.
In response to questions from Labour leader Sir Keir Starmer, Mr Sunak said: “I obviously can’t prejudge the outcome of that but it is right that we fully investigate this matter and establish all the facts.”
Since I commented on this matter last week more information, including a statement from the Minister Without Portfolio, has entered the public domain which is why it’s right that we do establish the facts— Rishi Sunak
A week ago, Mr Sunak told MPs that Mr Zahawi had “already addressed the matter in full” – but Downing Street subsequently revealed the Prime Minister had not been aware that the Conservative Party chairman had paid a penalty to HMRC as part of the settlement.
Mr Sunak said: “Since I commented on this matter last week more information, including a statement from the Minister Without Portfolio, has entered the public domain which is why it’s right that we do establish the facts.”
In response to questions from Labour leader Sir Keir Starmer, Mr Sunak said: “I obviously can’t prejudge the outcome of that but it is right that we fully investigate this matter and establish all the facts.”
Sir Keir told MPs: “I think anybody watching would think it’s fairly obvious that someone who seeks to avoid tax can’t also be in charge of tax. Yet for some reason the Prime Minister can’t bring himself to say that or even acknowledge the question.”
He also made a veiled reference to Mr Sunak’s wife Akshata Murty, who has held non-domiciled status.
Suggesting that the job in No 10 was “too big” for Mr Sunak, Sir Keir said: “We all know why the Prime Minister was reluctant to ask his party chair questions about family finances and tax avoidance.
“But his failure to sack him when the whole country can see what’s going on shows how hopelessly weak he is – a prime minister overseeing chaos, overwhelmed at every turn.”
Mr Sunak responded that: “I stand by my values and my principles even when it is difficult.”
Mr Zahawi turned up for work at Conservative Campaign Headquarters (CCHQ) on Wednesday as usual ahead of Mr Sunak’s Commons appearance.
Senior Conservative MP Caroline Nokes has called on Mr Zahawi to “stand aside until this matter is all cleared up”, but Mr Sunak has so far stood by him.
Commons Defence Committee chairman Tobias Ellwood said the situation is “a distraction”.
But the Tory MP said that now Mr Sunak had asked Sir Laurie to examine the case, “it makes absolute sense for the ethics adviser to report” before any further action is taken.
“These are tax matters, nobody knows the full picture of that, by the way, except Nadhim Zahawi and of course HMRC, so let’s allow that report to land and then we have to take things from there,” he told the BBC.
The row centres on a tax bill over the sale of shares in YouGov, the polling firm Mr Zahawi founded, worth an estimated £27 million which were held by Balshore Investments, a company registered offshore in Gibraltar linked to Mr Zahawi’s family.
Mr Zahawi said HMRC concluded there had been a “careless and not deliberate” error in the way the founders’ shares, which he had allocated to his father, had been treated.
Downing Street subsequently revealed did not know last week that Mr Zahawi had paid a reported 30% penalty to HMRC.
Mr Zahawi has insisted he is “confident” he has “acted properly throughout”.
