Nadhim Zahawi, the UK’s new chancellor, is under pressure to explain his finances after it was reported that HM Revenue & Customs is investigating his tax affairs.
HMRC is said to be investigating Zahawi after being tipped off by the National Crime Agency, which audited the MP’s finances in 2020 but took no action, according to a report in the Independent newspaper.
News of the HMRC investigation – which has not been denied by the tax authorities – is inconvenient because the organization is under the auspices of the Treasury, which Zahawi now runs. The NCA has not commented on the allegations.
The tax revelation also contradicts HMRC’s insistence in June, when Zahawi was Education Secretary, that there were no investigations into government ministers.
The Financial Times received a freedom of information response from HMRC on June 15, which said between one and five ministers had been investigated by the tax authorities.
But on June 23, an HMRC spokesman said this was a mistake and was “wrong”. “We currently have no tax investigations into government ministers,” the spokesman said.
Rachel Hopkins, a shadow cabinet minister, called on HMRC to “urgently reveal” how many Tory ministers are under investigation.
“This apparent cover-up will shake public trust and scrutiny of ministers’ financial dealings,” she said.
“The government said up to five ministers’ tax affairs were under investigation, then they said none were, but now we learn the chancellor is under active investigation. . . the public has a right to get to the truth about all this shady business.
On Sunday, an HMRC official admitted a minister was under investigation.
An HMRC spokesman said: “We discovered that the information we had previously provided was based on an incomplete review of the department’s records. Just human error.”
Zahawi, who was previously linked to a company called Balshore Investments based in Gibraltar, denied wrongdoing and said he would cooperate with any investigations.
“Over the past few days, there have been news stories that are inaccurate, dishonest and clearly defamatory,” Zahawi said in a statement. “These blobs falsely claim that the Serious Fraud Office, the National Crime Agency and HMRC are investigating me. I am not aware of this. I have not been told that this is the case.”
He added that he had never been domiciled for tax purposes in the UK and said that if he became Prime Minister he would publish annual tax returns. “If there are any questions, of course I will answer any questions that HMRC have for me,” he added.
Zahawi made his fortune as co-founder and chief executive of YouGov, a polling firm, and is estimated to be worth close to £100 million.
Balshore Investments was previously described in YouGov’s annual reports as “the family trust of the family of Nadhim Zahawi”. The company held a stake in the firm worth more than £20m but had sold it by 2017-18. It is wholly owned by Gibraltar-registered T&T Nominees Ltd, which manages trusts for clients.
Zahawi said he never had an interest in Balshore Investments and that neither he nor his wife – nor their children – were beneficiaries. Instead, a spokesman said his father, Hareth Zahawi, owned Balshore, adding: “For information, his father does not live in the UK.”
Balshore is not included in Zahawi’s entry in the Register of Members’ Interests, nor in the Register of Ministers’ Interests, as it is owned by his father.
Dan Needle, head of the Tax Policy Associates think tank, has estimated that the YouGov shares held by Balshore are worth around £24m. Needle, a former head of tax at law firm Clifford Chance, called on the chancellor to clarify the finer details of his tax affairs.
Richard Murphy, professor of accountancy at the University of Sheffield, said: “It needs to be revealed who the beneficiaries of this trust are, whether money has been distributed and what tax has been paid.”
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