A former Conservative cabinet minister has called for Nadhim Zahawi to step down as party chair while an ethics investigation takes place into his tax affairs.
The former immigration minister Caroline Nokes said the story had become a distraction for the Tories and the prime minister and that Zahawi should “step aside” for the greater good.
It comes as Sunak’s official spokesperson refused to say whether he believed Zahawi had been consistently honest about his tax affairs, saying this should be established in an investigation by the PM’s ethics adviser.
On Monday, Sunak instructed his ethics adviser, Sir Laurie Magnus, to investigate Zahawi’s tax affairs but faces growing pressure over whether he knew about the HMRC inquiry when he appointed Zahawi to his cabinet.
It has emerged that Zahawi resolved a multimillion-pound tax dispute with HMRC by paying a penalty during his short time as chancellor under Boris Johnson.
Nokes said she welcomed the investigation because there are “too many unanswered questions” about the affair but said Zahawi could not survive the onslaught of negative front pages.
“When you become the story, it’s a distraction from anything else the government’s trying to do,” she told TalkTV. “There are countless examples of good, competent cabinet colleagues who got themselves in a mess, who have resigned and in some instances returned just a few months later, and I think in order to get this cleared up, Nadhim should stand aside and let the investigation run its course.”
Asked on Tuesday if Sunak was confident Zahawi had always told him the truth over tax, the prime minister’s spokesperson said there had not been discussions between the pair “on that specific level of detail”.
Asked if Sunak believed Zahawi had been honest more generally, the spokesperson said: “I don’t have much to add beyond what the prime minister set out yesterday. There is some ongoing work now by the independent adviser to ascertain the facts. And I think it’s right that he’s allowed to carry out that work, rather than me cutting across it.”
No 10 sources have argued that when ministers are vetted before appointment, HMRC officials only say whether someone has a tax matter outstanding, and nothing else, meaning Sunak would not have been warned.
However, a source in the government has told the Guardian No 10 had been aware of a penalty as part of a settlement with HMRC when Sunak appointed Zahawi, who is also a Cabinet Office minister, to the role. Downing Street has formally denied the claim.
This system would also strongly indicate that Johnson was warned about Zahawi’s tax affairs but nonetheless appointed him as chancellor, and so in ultimate charge of the UK’s tax system, something previously reported.
The policing minister, Chris Philp, sent out to speak for the government on Tuesday, said he did not think it was appropriate for Zahawi to recuse himself. He told BBC Breakfast: “I think it is reasonable that where there is an investigation, the person concerned is allowed to continue serving while that investigation continues.
“We do have a principle, don’t we in this country, innocent until proven guilty. That applies to a whole range of different circumstances. But I don’t think it is fair to jump to any conclusions before the investigation has concluded.”
Philp repeated No 10’s claim that Sunak was told there were “no outstanding issues” in relation to Zahawi’s tax affairs when appointing him Conservative party chair in the autumn.
“As far as I’m aware, the point at which Nadhim Zahawi was appointed to his current position by the current prime minister, the prime minister was not aware of the previous back and forward earlier in the summer,” he told Times Radio.
“And he was told there were no outstanding issues – taxation issues – applicable at that time. Obviously subsequent to that, particularly over the weekend just gone, a number of questions have arisen, have come up publicly. And it is in response to those that the prime minister has quite rightly announced this independent investigation.”
