The head of Britain’s ruling Conservative party, Nadhim Zahawi, said on Saturday that the problems that led to the payment of millions of pounds in tax refunds were due to “unintentional and inadvertent errors”.
The minister’s statement comes after a week of debate over tax matters that has prompted opposition Labor Party calls for his sacking. The government had insisted before Saturday that Zahawi’s tax affairs were private and refused to explain what happened.
The issue became controversial because Zahawi last year became the UK’s finance minister, and is in charge of HMRC, the UK’s tax authority.
Anneliese Dodds, chairwoman of the Labor Party, said the latest statement poked holes in Zahawi’s previous account of what she called “this murky affair”.
“In the midst of the biggest cost of living crisis in a generation, the public will rightly be surprised that anyone can claim that the failure to pay a million pounds worth of tax is a simple matter of carelessness,” Dodds.
Downing Street declined to comment on Zahawi’s claims.
Zahawi did not say in his statement how much HMRC has paid to settle the matter or whether he has agreed to pay a penalty that could increase the total payment to the authority to more than £5m.
The tax issues arise from Zahawi’s founding 22 years ago of YouGov, the polling firm that is the source of his estimated £100 million personal fortune.
In his statement, Zahawi said that when he founded the company, he did not have the money or expertise to “run it alone”. As a result, he asked his father for help. “In the process, he took a founding stake in the business in exchange for some invaluable capital and guidance,” Zahawi wrote.
Zahawi said there were questions about his tax affairs when he was appointed Chancellor of the Exchequer last year and that he discussed them with the Cabinet Office, the department that oversees ethics issues.
“After discussions with HMRC, they agreed that my father was entitled to the founding shares in YouGov, although they disagreed on the exact allocation,” Zahawi wrote. “He concluded that it was an ‘inadvertent and inadvertent error’.”
He added that in order to focus on “living as a public servant”, he chose to settle the matter and pay what HMRC said he would.
The minister also wrote that HMRC had agreed Zahawi was not a beneficiary of Balshore Investments, a Gibraltar-registered trust which YouGov had previously said benefited the minister.
According to Zahawi, his father who lives abroad owns Balshore.
Zahawi could be liable for tax on the money received by Balshore if he had been the beneficiary. The issue of Balshore’s role has been resolved before he is appointed chancellor of the Duchy of Lancaster by prime minister Liz Truss in September 2022, Zahawi wrote.
“When I was appointed prime minister, all tax matters were new,” added Zahawi.
Dodds said Zahawi still had to explain when he became aware of the HMRC investigation into his affairs and whether he was Chancellor of the Exchequer at the time.
Zahawi’s assistant declined to comment.