Inland Revenue experts are investigating the tax affairs of new chancellor and Tory leadership hopeful Nadhim Zahawi, The Independent can reveal.
HMRC became involved after a secret inquiry was initially launched into Mr Zahawi’s finances by the National Crime Agency (NCA) in 2020. The Independent has also established that officers from the Serious Fraud Office (SFO) investigated the chancellor’s financial affairs.
The probe was then passed to HMRC, which falls under the control of the Treasury – the department that Mr Zahawi now runs. A senior Whitehall source confirmed that the tax investigation is currently “unresolved”.
It can also be revealed that Boris Johnson, home secretary Priti Patel and the Cabinet Office were all informed of the investigations.
The disclosures come as multimillionaire Mr Zahawi announced he was running in the leadership race to succeed Mr Johnson as prime minister.
Launching his campaign on Saturday evening, Mr Zahawi pledged to lower taxes for individuals, families and businesses, boost defence spending, and continue with education reforms.
The Independent reported on Wednesday that the NCA’s International Corruption Unit had looked into Mr Zahawi’s finances and tax in an inquiry codenamed “Operation Catalufa”.
We also described how Mr Zahawi said he knew nothing about the matter until contacted by The Independent. The investigation was launched in 2020, the year Mr Zahawi rose to political prominence as vaccines minister during the pandemic.
There is no suggestion of any wrongdoing by Mr Zahawi, a popular and respected figure among Tory MPs.
Well-placed sources have now confirmed that HMRC, the NCA and the SFO had all been involved in a “detailed investigation” into Mr Zahawi. It is understood that the HMRC investigation is being conducted by a unit that is responsible for offshore tax issues.
A Cabinet Office spokesperson said: “Under the ministerial code, ministers must ensure that no conflict arises, or could reasonably be perceived to arise, between their ministerial position and their private interests, financial or otherwise.”
The spokesperson added: “The chancellor has followed the process set out in the ministerial code, and complied with those requirements to the satisfaction of the previous [Whitehall] independent [ethics] advisers.”
Asked which ethics advisers had cleared Mr Zahawi’s appointment – bearing in mind that Whitehall ethics adviser Lord Geidt resigned last month after clashing with Mr Johnson, and has not yet been replaced – the spokesperson said they believed Mr Zahawi had been cleared by Lord Geidt’s predecessor Sir Alex Allan when Mr Zahawi first became a minister in 2018. That was two years before the investigation into Mr Zahawi’s tax affairs started.
After publication of the latest revelations, a spokesperson for Mr Zahawi said: “All Mr Zahawi’s financial interests have been properly and transparently declared. Mr Zahawi is not aware of any formal investigation by HMRC. His taxes are fully paid and up to date. He will provide full information to any queries that HMRC have about his tax affairs.”
A Downing Street spokesperson said: “The usual pre-appointment declarations were made by the minister and any necessary checks completed.”
Mr Zahawi, who moved to the UK from Iraq as a child, made his fortune with polling company YouGov and in the oil industry, serving as an executive at Gulf Keystone Petroleum until 2018. He became MP for Stratford-upon-Avon in 2010.
The former education secretary was appointed chancellor this week following the resignation of Rishi Sunak. Having defended the prime minister, he then called for him to stand down the day after taking up the role, telling Mr Johnson he “must do the right thing and go”.
Asked if it had investigated Mr Zahawi, an HMRC spokesperson said: “We do not comment on identifiable taxpayers.”
An NCA spokesperson said: “The NCA does not confirm or deny the existence of investigations.”
A spokesperson for the SFO said they “could neither confirm nor deny” if it had investigated Mr Zahawi.
