Nadhim Zahawi, who won plaudits for his work as vaccines minister during the pandemic, now faces questions that threaten his political survival.
The Conservative party chair has been at the heart of a media storm over a disagreement with HMRC after the Guardian revealed on Friday that he had paid a penalty to the tax office as part of an estimated £5m tax settlement last year.
The million-pound penalty was agreed in order to resolve what he later described as a disagreement over the “exact allocation” of shares between him and his father in YouGov, the polling company he founded.
One of the richest members of the cabinet, Zahawi has amassed a personal fortune of more than £100m, a significant proportion of which is understood to be derived from the polling company YouGov, which floated on the Aim market of the London Stock Exchange in 2005.
In 2015, the MP took a job at an oil company with significant operations in Kurdistan. Zahawi earned about £30,000 a month, as well as bonus payments, while working for Gulf Keystone Petroleum, until he quit in 2018 when he became a minister. It was reported at the time that the Iraqi-born Zahawi won the work in part because of his Kurdish connections. He did not offer a comment to the Guardian at that time.
In 2017, he was reported to have amassed at least £25m in property, including prime real estate in Belgravia, London.
After his stint as vaccines minister, Zahawi was education secretary for nine months and then, following Rishi Sunak’s dramatic resignation from Boris Johnson’s government, he was hurriedly appointed chancellor.
Reports in the Independent in July last year, in which it was claimed Zahawi, who was chancellor at the time, was under investigation by HMRC and the National Crime Agency, sparked a wave of queries about his tax affairs. It was also reported by the Observer that a red flag was raised over his appointment to cabinet over his financial dealings. A spokesperson for Zahawi said at the time: “All Mr Zahawi’s financial interests have been properly and transparently declared.”
It was not the first time the MP’s business interests had been subject to intense scrutiny. A 2017 Guardian report examined ties to two Gibraltar-registered companies, Balshore Investments and Berkford Investments, which were owned by a trust.
Public statements about his finances are now being compared and some questions remain.
While Zahawi had previously stated that he had never benefited from Balshore, in his most recent statement he suggested only that he was not currently a beneficiary of Balshore. When asked on Saturday night by the Guardian, his team would not comment on whether he had ever benefited from Balshore Investments in the past.
In a statement on Saturday he said he was made aware of a tax problem when he was appointed chancellor: “Twenty-one years later [after founding YouGov and giving his father founding shares], when I was being appointed chancellor of the exchequer, questions were being raised about my tax affairs. I discussed this with the Cabinet Office at the time.
“Following discussions with HMRC, they agreed that my father was entitled to founder shares in YouGov, though they disagreed about the exact allocation. They concluded that this was a ‘careless and not deliberate’ error.”
Zahawi’s statement notes awareness of questions over his tax affairs at the time of his appointment as chancellor, which took place on 5 July 2022.
A representative for Zahawi issued a statement to the Independent four days later claiming he was not aware of a formal HMRC investigation and his taxes were up to date and fully paid.
A spokesperson for Zahawi said at that time: “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.”
After two months as chancellor he was moved to a Cabinet Office role by Liz Truss and then became Conservative party chair after her ill-fated premiership.
Earlier this month on 15 January, the Sun on Sunday reported that Zahawi had paid “several million in tax” to settle a dispute with HRMC over Balshore Investments.
By Wednesday last week, Zahawi’s spokesperson was still claiming his tax affairs “were and are fully up to date and paid in the UK”. By the weekend, this shifted to give a more specific timing about when his tax affairs were up to date: “When I was appointed by the prime minister [as Conservative party chairman in October 2022], all my tax affairs were up to date.”
Also last Wednesday, Sunak told MPs that Zahawi had “addressed this matter in full”. But that position has changed too. Less than a week later, the prime minister agreed that there were “questions that need answering” and appointed his ethics adviser to launch an inquiry that could help determine Zahawi’s fate.
