Nadhim Zahawi apologises for ‘misdemeanour’ over £5m HMRC settlement

Nadhim Zahawi has apologised for his handling of an HMRC investigation into his tax affairs, and confirmed he paid the taxman £5m to settle the case.

The former chancellor, who said on Thursday that he intends to step down as an MP at the general election, said he “should have been more explicit” about the details of his settlement.

Mr Zahawi said his mistakes “have been mine” as he joined the exodus of Tory MPs standing down at the election, which is expected to be held this autumn.

On Sunday, he said: “I should have been much clearer in my declarations as a minister that I was under investigation by HMRC and had reached a settlement with HMRC for a non-deliberate and careless offence, but nevertheless a misdemeanour. So, I accept all these things.”

His apology comes a year after he was sacked by Rishi Sunak after an ethics probe found there had been serious breaches of the ministerial code in relation to his tax affairs.

The investigation was sparked by The Independent’s revelation of an HMRC investigation into the MP over his tax affairs. Mr Zahawi tried to stop this publication from exposing the investigation by threatening to sue if the information was published.

At the time, Mr Zahawi, who was serving as chancellor, repeatedly said he had paid all due taxes and would “one hundred per cent take legal action” if it was reported that he had been investigated.

However, The Independent ignored his threats and published two reports, detailing how Mr Zahawi had faced inquiries from the Serious Fraud Office, the National Crime Agency (NCA) and HMRC.

Mr Zahawi did not sue, and paid a penalty of more than £1m to HMRC in a settlement worth almost £5m in total.

The prime minister’s adviser, Sir Laurie Magnus, found that Mr Zahawi had broken ministerial rules seven times by failing to be open and honest during the tax saga – including by making “untrue” public statements.

Appearing on the BBC’s Sunday With Laura Kuenssberg, Mr Zahawi refused to apologise for accusing journalists of running a smear campaign against him, despite the reporting around his tax affairs proving to be accurate.

He said the “smears” he was referring to were in relation to the involvement of the NCA in his case. “I have never had any dealings with them ever, or any investigations from them,” he said.

The Independent’s role in exposing Mr Zahawi’s tax affairs was praised as having been “crucial” after he became the 64th Conservative MP to announce their intention to stand down.

Liberal Democrat deputy leader Daisy Cooper said: “The Independent led the charge in exposing Nadhim Zahawi’s tax affairs, despite his attempts to silence them with threats of legal action. This was a crucial investigation in the public interest, and one that ultimately helped end Zahawi’s political career.”

Mr Zahawi was facing a tough re-election battle, with polls suggesting he was on course to lose the Stratford-on-Avon seat, which has elected only Conservatives since 1950.

In his resignation letter, he said: “My mistakes have been mine, and my successes have come from working with, and leading, amazing people.”

He pledged that the Conservative Party would “continue to have my unswerving support into and beyond the next general election”.

Referring to his role as the “MP for Shakespeare”, he said: “As my most famous constituent once wrote: ‘Go to your bosom; knock there and ask your heart what it doth know.’

“I have come to feel that the time is right for a new, energetic Conservative to fight for the honour of representing Stratford-on-Avon and assuming the mantle of MP for Shakespeare.”

Before his short stint as chancellor of the Exchequer, Mr Zahawi served in government as vaccines minister during the pandemic, overseeing the rollout of the coronavirus vaccine programme. He also served as education secretary, and was later made Tory party chair but was sacked from that role by Mr Sunak.