Nadhim Zahawi sacked by Rishi Sunak over tax affairs row

It comes following a growing row over a fine the Tory party chairman paid to HMRC over his tax affairs and his failure to declare it in his ministerial interests. 

The Prime Minister told Zahawi in a letter that it was “clear that there has been a serious breach of the Ministerial Code”. It turns out, the ethics probe uncovered seven breaches of the code. 

READ MORE: Stephen Noon: It’s time to move on from mindset of being ‘the 45’

Last week, Zahawi admitted paying a penalty as part of an estimated £4.8 million settlement with HMRC, with calls for him to go intensifying after the head of the organisation said such penalties were not issued for “innocent errors”.

Zahawi has served as minister without portfolio in the Cabinet under Sunak since October 2022.  

The SNP said Zahawi should have been sacked earlier, adding that Sunak's "dithering and indecision" kept him in post. 

In a letter to Zahawi published on Sunday morning, Sunak said: “When I became Prime Minister last year, I pledged that the Government I lead would have integrity, professionalism and accountability at every level.

“That is why, following new information which came to light in recent days regarding your personal financial arrangements and declarations, I asked Sir Laurie Magnus, the independent adviser on ministers’ interests, to fully investigate this matter. You agreed and undertook to co-operate fully with the inquiry.

Sunak sacked Zahawi following an ethics investigation (Image: PA)

“Following the completion of the independent adviser’s investigation – the findings of which he has shared with us both – it is clear that there has been a serious breach of the ministerial code. As a result, I have informed you of my decision to remove you from your position in His Majesty’s Government.

“As you leave, you should be extremely proud of your wide-ranging achievements in Government over the last five years.

“In particular, your successful oversight of the Covid-19 vaccine procurement and deployment programme which ensured the United Kingdom was at the forefront of the global response to the coronavirus pandemic.”

Following the revelations around Zahawi's tax affairs, the independent adviser on ministers’ interests, Sir Laurie Magnus CBE, was asked to investigate by Sunak. 

READ MORE: Campaigners warn post-Brexit bill will sow seeds of another bank crash

Many of Zahawi's seven code breaches related to his failure to disclose the investigation - when the HMRC probe was launched in April last year, when he was appointed education secretary, and then chancellor, under Boris Johnson, when he took on the role of chancellor of the Duchy of Lancaster under Liz Truss, and then as Tory party chairman and minister without portfolio under Sunak.

The other two breaches relate to inaccurate statements made to the press after the probe into his tax affairs was first revealed, and for refusing to declare he had come to an agreement with HMRC and paid a fine. 

Magnus met with HMRC and had sight of details of the tax investigation, and released his findings in a four-page letter to the Prime Minister, writing that Zahawi had "shown insufficient regard" for the ministerial code. 

Zahawi told Magnus he had “formed the impression” he and his advisers were “merely being asked certain queries” over his tax affairs and this “impression persisted” until he received a letter from HMRC on July 15 2022.

Magnus added: “However, on the basis of the confidential information to which I have had access, including correspondence between HMRC and Mr Zahawi personally, I consider that an individual subject to the HMRC process faced by Mr Zahawi should have understood at the outset that they were under investigation by HMRC and that this was a serious matter.”

He added that the HMRC investigation was clearly a “relevant matter” for a minister to declare in their interests and should have informed their Permanent Secretary.

“I would likewise expect a Minister proactively to update their declaration of interests form to include details of such an HMRC process,” Magnus added.

The letter also confirmed that Zahawi made no reference to the HMRC investigation after he completed a declaration of interest form following his appointment as Chancellor under Boris Johnson. Zahawi held the top job between July 5 and September 6 2022. 

Following the HMRC letter on July 15, Zahawi updated his interests, the letter added, but it also said he “failed to meet the requirement” to declare anything that would “give rise to a conflict”. 

Magnus said the fact that the HMRC investigation led to a penalty required “declaration and discussion”.

READ MORE: Rule change to enable Holyrood snap election could face legal battle

He added: “It is a relevant interest which could give rise to a conflict, and particularly so in the case of HM Treasury Ministers and the Chancellor of the Exchequer, who has responsibility for the UK tax system. 

“As a result of my inquiries, I conclude that Mr Zahawi failed to update his declaration of interest form appropriately after this settlement was agreed in principle in August 2022.”

Magnus added that the full details of the HMRC investigation were not revealed until mid-January 2023, and that due to Zahawi failing to disclose the information at the time of his appointment the “Cabinet Office was not in a position to inform the appointing Prime Minister”. 

“Taken together, I consider that these omissions constitute a serious failure to meet the standards set out in the Ministerial Code,” Magnus concluded.

Blackman says Sunak should have sacked Zahawi earlier (Image: PA)

Kirsty Blackman, SNP Cabinet Office spokesperson, said: "Nadhim Zahawi should have been sacked well before now, but it has only been Rishi Sunak's dithering and indecision that has kept him in post.

"The Prime Minister shouldn't have needed an ethics adviser to tell him that a sitting Chancellor should not be in a tax dispute about millions of pounds of unpaid taxes.

"Sunak still has questions to answer over this whole affair about what he knew about the settlement and what advice he received about Zahawi's tax on his appointment.

"The UK government is riddled with sleaze and scandal and the only way Scotland can escape is by becoming an independent country."

Maggie Chapman MSP, Scottish Green's economy spokesperson, said it was good news Zahawi had been sacked but the row raised issues of the "judgement" of Sunak and said he had many questions to answer. 

READ MORE: Wife of Wales FM Mark Drakeford dies suddenly, say Welsh Government

She said: “What did he know, when did he know it, and why has he dithered so long when it was clear Nadhim Zahawi had broken the ministerial code and the trust placed in him?

“This revolving door of scandal, borderline corruption and incompetence is spinning out of control. This Prime Minister, like the previous two before him, is now shrouded in controversy.

“He must explain his actions to the nation and stake what's left of his reputation on there being no more scandals hiding in the shadows of his cabinet

“The Tories cannot be trusted. This rotten husk of a government must go, and go now.”

Zahawi broke cover after his sacking to take a pop at the press in a letter to the PM, but made no reference to the multiple code breaches he was found to have committed. 

No 10 has been contacted for comment.