Conservative Party chairman Nadhim Zahawi said on Saturday that he had been “careless” with his tax affairs, following a report that he’d paid a £4.8- million (R103-million) bill to His Majesty’s Revenue & Customs, including a 30% penalty for not settling the correct amount at the time. 

The admission by Zahawi, a former chancellor of the exchequer who still attends Sunak’s cabinet, put a senior government colleague on the back foot in broadcast interviews on Sunday. Foreign Secretary James Cleverly was repeatedly asked about Zahawi’s tax affairs and whether his colleague should be more transparent. Under questioning, he told the BBC’s Sunday With Laura Kuenssberg that politicians do face “an enhanced duty for openness”. 

However, Cleverly was unable to say whether Sunak knew about Zahawi’s tax issues when he appointed him to his cabinet in October. “I don’t know what conversations the Prime Minister had [over] the appointment of any other minister,” Cleverly told the BBC.

Sunak has said little specifically about Zahawi’s situation, a point highlighted by the Labour Party’s deputy leader Angela Rayner.

“Rishi Sunak can no longer maintain his deafening silence,” she said.

Integrity in focus

Though Zahawi’s tax affairs do not relate to government business, the growing controversy is an unwelcome distraction for Sunak, and the foreign secretary’s answers are likely to prompt further interest into whether the prime minister is able to stick to a pledge to run an administration based on “integrity and accountability”. 

Since coming to office, Sunak has faced questions over his re-appointment of Home Secretary Suella Braverman less than a week after she resigned over a security breach, while Deputy Prime Minister Dominic Raab faces multiple complaints of bullying. On Friday Sunak received a fixed penalty notice from police in Lancashire, in the north of England, for failing to wear a seat belt in a moving car.

Zahawi, 55, came to the UK as a child refugee from Iraq, and in 2010 co-founded the global polling company YouGov. Questions over his tax affairs first surfaced in July, though at the time he sought to shut down questions on the matter as a personal smear. 

Dan Neidle, a former head of tax at City of London law firm Clifford Chance LLP, has continued to press Zahawi and probe his accounts on his blog and on Twitter. In an article published late on Saturday in The Sunday Times, Neidle said that inconsistencies remain in Zahawi’s account of events. “Nobody pays millions in tax to settle a dispute with HMRC when their taxes are ‘properly declared and paid’,” Neidle wrote.

‘Not deliberate’

In his statement, also issued on Saturday, Zahawi said tax authorities “concluded that this was a ‘careless and not deliberate’ error. So that I could focus on my life as a public servant, I chose to settle the matter and pay what they said was due”.

The episode comes at a delicate time for Sunak and his government, which on Monday faces the largest walkout yet by ambulance staff and the start of crucial week of talks with public sector unions. Teachers, rail workers and civil servants are planning a co-ordinated wave of strikes on 1 February.

Sunak – like Zahawi – is a multimillionaire, prompting regular scrutiny about how much he empathises with the financial difficulties voters face during the current cost-of-living crisis. 

His Tories trail Labour by more than 20 points in recent polls, leaving the premier with a sizable challenge to repair his party’s fortunes in time for a general election that he must hold in two years’ time at the latest. BM/DM