British Prime Minister Rishi Sunak has sacked Nadhim Zahawi as chairman of the Conservative party after an ethics adviser concluded there had been a “serious breach” of the ministerial code.
Sunak finally let go of Zahawi after weeks of stories about his tax affairs, which have damaged the ruling party’s politics during the historic cost-of-living crisis.
The sacking is a major U-turn for Sunak who had previously stood behind Zahawi, admitting in the House of Commons earlier this month that the MP had “completely dealt with this issue”.
In a letter published by Downing Street on Sunday morning, the prime minister said he was intervening in line with his pledge to ensure his government had “integrity, professionalism and accountability at every level”.
Sunak asked Sir Laurie Magnus, the ethics adviser, to investigate Zahawi’s tax affairs on Monday after it emerged the MP had made a settlement of about £5 million to HM Revenue & Customs last summer – including fine payments.
“It is clear that there is a serious violation of the ministerial code,” wrote Sunak. “Consequently, I have informed you of my decision to remove you from your position in His Majesty’s Government.”
The Magnus investigation found that the former Tory chairman began “interacting” with HMRC in April 2021 and settled the dispute in August last year, with a settlement agreement signed in September.
The ethics adviser said the technical details of the tax probe were outside the scope of his review, which focused only on Zahawi’s handling of the matter and whether he acted to the “highest standards of propriety”.
All ministers are required to make a full declaration of interest – which includes questions on tax matters – and ensure that the form is kept up-to-date at all times, while also discussing potential conflicts regularly with the permanent secretary.
Magnus said Zahawi thought that the meeting in June 2021 with HMRC was not an official investigation but “was only asked certain questions. . . about his tax affairs”. Only on July 15, 2022 he received a letter from the tax authority explaining that there was an investigation, the MP said.
“I consider that individuals involved in the HMRC proceedings that Mr Zahawi is facing should be made aware at the outset that they are being investigated by HMRC and that this is a serious matter.”
Zahawi should have told the permanent secretary and asked for advice, he concluded.
“I also expect the minister to proactively update the declaration of interest form to include the details of the HMRC process,” added Magnus.
When Zahawi was appointed chancellor on July 5 last year, he completed a declaration of interest form without reference to the HMRC investigation.
The form later admitted in an attachment that Zahawi was in discussions with HMRC to “clarify some questions”. It was only after receiving HMRC’s letter on July 15 that Zahawi updated his declaration of interest – repeating his earlier claim that he was clarifying the question.
As a result, Zahawi failed to meet the requirements in the ministerial code to declare any interest that could be considered to cause a conflict of interest, Magnus said.
Ethics counsel confirmed that the settlement with HMRC included a penalty imposed on the basis of “negligence”, which refers to a failure to take “reasonable care” in relation to tax matters.
Zahawi failed to update his declaration of interest form when he agreed a settlement in principle with HMRC in August, failing to declare it until last weekend, they concluded.
In October, when Sunak reappointed Zahawi to the cabinet, the MP failed to disclose sufficient information to the Cabinet Office – meaning the prime minister was unaware of the situation.
The removal violated the ministerial code, Magnus said.
The report also criticized Zahawi for claiming on July 10 last year that news reports about him being investigated were “inaccurate, unfair and clearly smears”.
Ministers must be open with parliament and the public and not make misleading statements under the code.
“I consider that the individual subjects of the HMRC proceedings that Mr Zahawi is facing should be aware that they are being investigated by HMRC and that this is a serious matter,” Sir Laurie said.
Daisy Cooper, deputy leader of the Liberal Democrats, said Sunak should not take long to act. “Sunak is finally acting after spending days defending the indefensible. . . . His first 100 days in office have been marred by endless Conservative sleaze and scandal.