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Why are Nadim Zahavi’s taxes giving Rishi Sunak such a headache

It seems the mess of the Boris Johnson era and the chaos of Liz Truss’ premiership is now scaring a new prime minister.


Any hopes that Rishi Sunak would pacify the government were dashed this week as he faced scandals on multiple fronts.

He has already lost a cabinet minister to claims of intimidation and many others are facing sharp criticism.

Johnson continues to cause headaches from the sidelines and the slight embarrassment of a seatbelt gaffe.

But the major debacle facing the new prime minister centers around the questionable tax affairs of Conservative Party chairman Nadim Zahawi.


Here, HuffPost UK talks you through the latest row involving Westminster and why it matters.

Who is Nadim Zahavi?

Nadim Zahawi, 55, was born in Iraq but fled to the UK as a refugee when he was nine.


His family was influential in the country, but he feared for his life when Saddam Hussein came to power in the late seventies.

Zahavi grew up in Sussex, was educated at private and comprehensive schools, and studied chemical engineering at University College London.

He went into business and founded a firm selling Teletubby merchandise before co-founding pollster YouGov in 2000.


He became a Tory MP in 2010 and hit the headlines in the middle of the pandemic when he was made responsible for England’s COVID-19 vaccine roll-out.

Johnson made her education secretary in 2021, before serving as chancellor for two months during the chaos of the caretaker government.

The MP for Stratford-upon-Avon was also the frontrunner to replace Johnson last year.

He remained in the top table under a truce that made him Chancellor of the Duchy of Lancaster and Sunak made him Chairman of the Conservative Party.

Nadim Zahavi’s interpretation of taxes

The allegations are linked to Zahavi’s Gibraltar-based trust Balshore Investments Ltd – in which his father Hareth is a director.

When YouGov was set up, the trust was allocated an equal number of shares given to its co-founder Stephen Shakespeare.

When asked about this last year, the then-Chancellor said that neither he nor his wife had made any profit from the trust and denied that it had been used to avoid tax, saying that his father “Living Abroad”.

The stake in the company owned by Balshore was eventually sold by 2018 for around £27 million.

Experts say that if Zahavi has benefited from that transaction, he should pay tax on it.

They point to a 2005 document that suggests that when Balshore at least partially covered the debt, he benefited from the trust.

The whole saga was brought to light by tax attorney Dan Needle, who has been working to uncover Zahavi’s tax affairs.

What happened?

The claims began to emerge when Zahavi was made Chancellor, with reports that Cabinet Office officials alerted then Prime Minister Johnson to the HMRC controversy.

Zahavi has now admitted paying what HMRC said was “due” after “disagreeing about the exact allocation” of shares in YouGov, an error he said was not “negligent” willful.

It has since emerged that Zahavi paid fines to HMRC while Chancellor.

Zahavi has not disclosed the size of the settlement – ​​reported to be an estimated £4.8 million including a 30% penalty – or confirm whether it has paid the fine.

Needle estimated he owed £3.7 million.

Zahavi released a statement to “clear up some confusion about my finances”.

He said: “Following discussions with HMRC, they agreed that my father was entitled to founder shares in YouGov, although they disagreed about the exact allocation. They concluded it was a ‘negligent and not intentional’ error.

“So that I could focus on my life as a public servant, I decided to settle the matter and do what he said was due, which was the right thing to do.”

What has Rishi Sunak done about it?

The prime minister has asked his independent ethics adviser to look into Zahawi after calling for his sacking.

Sunak “obviously” said “there are questions that need to be answered” and added: “That is why I have asked our independent consultant to get to the bottom of everything, investigate the matter thoroughly and establish all the facts and I have been asked to give advice.” Ministerial Code of Compliance by Nadim Zahavi.

“I am pleased that Nadeem Zahawi shares that view and has agreed to cooperate fully with that investigation.”

However, the decision to refer the matter to an ethics adviser means an immediate conclusion to the dispute is unlikely and Zahawi will remain in office.

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