Former chancellor Nadhim Zahawi faces fresh questions over his tax affairs after he was accused of paying a penalty as part of a multi-million-pound settlement with HMRC, the UK Revenue and Customs department.
Iraq-born Mr Zahawi, who attends Prime Minister Rishi Sunak’s Cabinet, has been under pressure since it was reported that he had paid a seven-figure sum to end a tax dispute.
The Guardian newspaper has now reported that he paid a 30 per cent penalty, taking the estimated total to more than £4.8 million ($5.9 million).
Both Mr Zahawi’s team and the Conservative Party were contacted about the latest allegation but neither have responded.
Questions have swirled since newspaper reports of a tax dispute.
He allegedly avoided tax by using an offshore company registered in Gibraltar to hold shares in the polling company he co-founded, YouGov.
Labour has called for an inquiry into Mr Zahawi and its deputy leader Angela Rayner urged HMRC to clear up the “serious questions raised about a potential conflict of interest”.
Tax lawyer Dan Neidle has been working to expose the minister’s tax affairs and has estimated that he owed £3.7 million.
Interest could be due on top of the 30 per cent penalty reported by the Guardian, taking the possible total to in excess of £4.8 million.
Mr Neidle, of the Tax Policy Associates think tank, said “you don’t pay a 30 per cent 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 it 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.”
The government's website says a penalty of between 0 and 30 per cent is due if it arises because of a lack of reasonable care, while a deliberate error can incur a penalty of between 20 and 70 per cent.
Ms Rayner said: “If HMRC has applied a 30 per cent penalty in this case, the British people deserve to know why, yet the Conservative Party chair [Mr Zahawi] 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 he was at 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 that the minister “has never had to instruct any lawyers to deal with HMRC on his behalf”.
Mr Sunak has defended his ally, saying at Prime Minister’s Questions 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.”
UAE currency: the story behind the money in your pockets
UAE currency: the story behind the money in your pockets
In numbers: PKK’s money network in Europe
Germany: PKK collectors typically bring in $18 million in cash a year – amount has trebled since 2010
Revolutionary tax: Investigators say about $2 million a year raised from ‘tax collection’ around Marseille
Extortion: Gunman convicted in 2023 of demanding $10,000 from Kurdish businessman in Stockholm
Drug trade: PKK income claimed by Turkish anti-drugs force in 2024 to be as high as $500 million a year
Denmark: PKK one of two terrorist groups along with Iranian separatists ASMLA to raise “two-digit million amounts”
Contributions: Hundreds of euros expected from typical Kurdish families and thousands from business owners
TV channel: Kurdish Roj TV accounts frozen and went bankrupt after Denmark fined it more than $1 million over PKK links in 2013
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Spain drain
CONVICTED
Lionel Messi Found guilty in 2016 of of using companies in Belize, Britain, Switzerland and Uruguay to avoid paying €4.1m in taxes on income earned from image rights. Sentenced to 21 months in jail and fined more than €2m. But prison sentence has since been replaced by another fine of €252,000.
Javier Mascherano Accepted one-year suspended sentence in January 2016 for tax fraud after found guilty of failing to pay €1.5m in taxes for 2011 and 2012. Unlike Messi he avoided trial by admitting to tax evasion.
Angel di Maria Argentina and Paris Saint-Germain star Angel di Maria was fined and given a 16-month prison sentence for tax fraud during his time at Real Madrid. But he is unlikely to go to prison as is normal in Spain for first offences for non-violent crimes carrying sentence of less than two years.
SUSPECTED
Cristiano Ronaldo Real Madrid's star striker, accused of evading €14.7m in taxes, appears in court on Monday. Portuguese star faces four charges of fraud through offshore companies.
Jose Mourinho Manchester United manager accused of evading €3.3m in tax in 2011 and 2012, during time in charge at Real Madrid. But Gestifute, which represents him, says he has already settled matter with Spanish tax authorities.
Samuel Eto'o In November 2016, Spanish prosecutors sought jail sentence of 10 years and fines totalling €18m for Cameroonian, accused of failing to pay €3.9m in taxes during time at Barcelona from 2004 to 2009.
Radamel Falcao Colombian striker Falcao suspected of failing to correctly declare €7.4m of income earned from image rights between 2012 and 2013 while at Atletico Madrid. He has since paid €8.2m to Spanish tax authorities, a sum that includes interest on the original amount.
Jorge Mendes Portuguese super-agent put under official investigation last month by Spanish court investigating alleged tax evasion by Falcao, a client of his. He defended himself, telling closed-door hearing he "never" advised players in tax matters.
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