UK PM Sunak fires Tory chairman Zahawi over tax affairs

Inquiry finds that former chancellor lied to Conservative leaders

Nadhim Zahawi's departure comes after a damaging few weeks for Prime Minister Rishi Sunal. AP

British Prime Minister Rishi Sunak sacked Conservative Party chairman Nadhim Zahawi on Sunday after an investigation found he committed a serious breach by not being open about his tax affairs, in the latest scandal to hit one of Mr Sunak's top ministers.

Mr Sunak had initially stood by Mr Zahawi before ordering an independent adviser to investigate after it emerged Mr Zahawi had paid a penalty to Britain's tax authority HMRC last year.

Mr Zahawi has said the tax body ruled he had been “careless” with his declarations but not deliberately made an error to pay less tax.

Mr Sunak's independent adviser Laurie Magnus said that Mr Zahawi did not declare that his tax affairs were being investigated when he was briefly made chancellor last year, and failed to disclose details when Mr Sunak appointed him chairman of the party.

“Following the completion of the Independent Adviser's investigation … it is clear that there has been a serious breach of the Ministerial Code,” Mr Sunak said in a letter to Zahawi.

“As a result, I have informed you of my decision to remove you from your position in His Majesty’s Government.”

Mr Zahawi's response to Mr Sunak did not mention either the HMRC or the independent adviser's investigation. He expressed concern at the conduct of some in the media in recent weeks and said he would support Mr Sunak's agenda as a backbench politician.

“I am sorry to my family for the toll this has taken on them,” he said.

It is a setback to Mr Sunak's attempt at a government reset after a chaotic year that has seen three different British prime ministers. An investigation into alleged bullying by Deputy Prime Minister Dominic Raab is continuing and could cause further headaches.

One Conservative MP said sacking Mr Zahawi was “clearly the right decision,” adding Mr Zahawi “should have resigned to avoid the embarrassment.”

“Raab is rather different,” the politician, who declined to be named, said. “One man’s bullying is another’s firm direction.” Mr Raab has denied bullying allegations.

The opposition Labour Party said that Mr Sunak had shown weakness in how he has handled the cases of Mr Zahawi and Mr Raab.

“It's vital that we now get answers to what Rishi Sunak knew and when did he know it,” Labour's education spokeswoman Bridget Phillipson said on Sunday.

Mr Zahawi's sacking comes as Mr Sunak's government, facing decades-high inflation and a wave of public sector strikes, trails badly in opinion polls ahead of an expected 2024 election.

Mr Magnus said that the details of HMRC's investigation — relating to Mr Zahawi's co-founding in 2000 of opinion polling firm YouGov, and how many shares his father had taken to support its launch — were outside the scope of his own inquiry.

But he found that Mr Zahawi had failed to declare HMRC's investigation, or acknowledge that it was a serious matter. Mr Zahawi had characterised reports last July over his tax affairs as “clearly smears”.

Mr Zahawi did not correct the record until last week, when he said he had reached a settlement with the authorities.

“I consider that this delay in correcting an untrue public statement is inconsistent with the requirement for openness,” Mr Magnus said in a letter to Mr Sunak.

He added that Mr Zahawi had shown “insufficient regard” for the requirement “to be honest, open and an exemplary leader through his own behaviour.”

Mr Zahawi became chancellor following Mr Sunak's own resignation from the role in July last year, which helped end Boris Johnson's scandal-hit premiership.

When he replaced Liz Truss as prime minister after her brief but tumultuous time in power, Mr Sunak promised that “this government will have integrity, professionalism and accountability at every level.”

But the reboot has got off to a tricky start. Along with the investigations into Mr Zahawi and Mr Raab, Mr Sunak reappointed interior minister Suella Braverman just five days after Ms Truss sacked her for breaching the ministerial code over security rules, and in November Gavin Williamson resigned as a minister following bullying allegations.

Asked if Conservative politicians consistently follow their own set of rules, senior minister Michael Gove said there are “always people who will fall short.”

“Because someone commits a lapse or a sin, that shouldn't be automatically be taken as an opportunity to damn an entire organisation,” he told the BBC.