Rishi Sunak sacks Nadhim Zahawi after tax investigation

Rishi Sunak finally sacked Nadhim Zahawi as Tory party chairman over a “serious breach” of the ministerial code, more than six months after The Independent first revealed details of an HMRC investigation into his tax affairs.

Mr Zahawi – who is now facing calls to resign his seat as an MP – did not apologise for his handling of his tax affairs and lashed out at the media in his exit letter to the PM.

More than eight days after it emerged that he had paid a £1m fine to HMRC, the prime minister told Mr Zahawi in a letter that there had been “a serious breach of the ministerial code” and that he would be stripped of his cabinet role.

Mr Sunak revealed on Sunday morning that his ethics adviser Sir Laurie Magnus judged Mr Zahawi to have broken ministerial rules seven times by failing to be open and honest during the tax saga – including making “untrue” public statements.

But former Tory minister Michael Portillo said the length of time it took Mr Sunak to act had made him “look weak”, while ex-No 10 communications director Craig Oliver agreed the delay made the PM look “quite weak”.

Conservative MP Nigel Mills also shared his frustration. “I don’t see why we couldn’t have been here a week ago,” he told The Independent – saying it was “odd” for Mr Zahawi to be sacked for a lack of transparency rather than the fact he had been fined £1m by HMRC while chancellor.

Tory MPs shared their anger at Mr Zahawi for dragging the controversy out. One senior party figure said he had badly damaged the government by not “stepping back and sorting it” last week. Another MP said Mr Zahawi had “ruined himself” – adding that “there is no way back for him” in government.

Labour accused Mr Sunak of being “too weak” to act quickly during the tax saga – calling for “full transparency” from No 10 about when PM became aware of HMRC probe into Mr Zahawi’s tax affairs, and what due diligence was carried out before he was made party chair.

The Independent first revealed that HMRC was investigating Mr Zahawi’s taxes in relation to an offshore company holding shares in the YouGov firm he co-founded. It emerged earlier this month that Mr Zahawi paid a £1m penalty as part of a £5m tax settlement.

Mr Zahawi initially dismissed the story as a “smear”, claimed he was “not aware” of HMRC inquiries, and threatened The Independent and others with legal action. But last Saturday, the minister admitted that HMRC had found an “error” that was “careless and not deliberate”.

Sir Laurie’s report revealed that Mr Zahawi had attended a meeting with HMRC tax officials in June 2021 about an investigation launched a couple of months earlier – well before he was made education secretary in September 2021.

Mr Zahawi had told Sir Laurie that he had “formed the impression” he was only being asked “certain queries” over his tax affairs. But the ethics adviser said Mr Zahawi should have understood the investigation was a “serious matter”.

The No 10 ethics adviser also accused him of making an “untrue public statement” about the probe in the summer. Sir Laurie also found a series of serious “omissions” by Mr Zahawi to government officials which also fell short of the ministerial code.

By failing to declare the tax issue before Boris Johnson made him chancellor in July 2022, Mr Zahawi failed to declare interests “which might be thought to give rise to a conflict”, said the adviser.

Sir Laurie also told the PM that Mr Zahawi “failed to disclose relevant information” on the tax probe when he was appointed Cabinet Office minister by Liz Truss in September and Tory chairman by Mr Sunak in October.

“Taken together, I consider that these omissions constitute a serious failure to meet the standards set out in the ministerial code,” said Sir Laurie, who said Mr Zahawi had “shown insufficient regard” for the code and the requirement to be “honest, open and an exemplary leader through his own behaviour”.

In a letter to the PM, Mr Zahawi said Mr Sunak could be “assured of my support from the backbenches in the coming years” – but offered no apology over the controversy. Mr Zahawi said he took pride in the Covid vaccine rollout, and helping with arrangements for the Queen’s funeral.

Anneliese Dodds, Labour party chair, said Mr Zahawi should have been sacked “when this murky affair first surfaced”, adding: “This doesn’t change the fact that his government is drowning in sleaze.”

The Observer reported that Mr Sunak received informal advice in October that there could be a reputational risk from Mr Zahawi’s tax affairs. But a No 10 spokesperson denied the claim, saying the PM “was not informed of these details, informally or otherwise”.

The Liberal Democrats called on Mr Zahawi to resign his seat as an MP. “He has shown he is unfit to serve in cabinet and unfit to serve the people of Stratford-on-Avon,” said deputy leader Daisy Cooper.

The party also called on the government to clarify whether Mr Zahawi informed the attorney general before issuing threats of legal action against journalists, as well as calling for inquiry into the issue.

Some Tories called for an overhaul of vetting for ministerial appointments. Ex-culture secretary Ed Vaizey criticised the fact that ministers don’t receive “any kind of positive vetting”. Tory MP Robin Walker told the BBC that he “did not see” why ministers were not vetted in the same way as those put forward for honours.

Former Tory chancellor George Osborne he told The Andrew Neil Show on Channel 4 that Mr Sunak was being “pulled down by a series of scandals” and has to act “pretty quickly” to draw a line under perceptions of Tory sleaze.

He said Mr Sunak may need to better explain own resignation over Mr Johnson’s approach to standards. “I think he’ll have learned lessons from the Zahawi affair, that you need to act more quickly than he did – and I think that he’s going to try and define himself now as ‘the sleaze buster’.”

Cabinet minister Michael Gove suggested that the Tories should not be “damned” by Mr Zahawi’s “sin” when questioned on the BBC’s Sunday with Laura Kuenssberg. He said Mr Sunak had acted “decisively” and said Mr Zahawi should “absolutely not” quit as an MP.

Mr Sunak now faces the tough task of replacing Mr Zahawi at CCHQ while Stephen Massey, the party’s chief executive, steps in as interim chair.

Jacob Rees-Mogg said Boris Johnson has “all the qualities” to be Tory chairman. “He is charismatic, he rallies the troops – he’s a sort of fully loaded Conservative,” the Johnson loyalist told GB News.