UK prime minister Rishi Sunak has sacked Nadhim Zahawi as chair of the Conservative party after his ethics adviser concluded there had been “serious breaches” of the ministerial code.
Sunak finally jettisoned Zahawi after weeks of stories about his tax affairs, which have been politically damaging for the ruling party during a historic cost of living crisis.
The sacking represents a significant U-turn for Sunak who previously stood behind Zahawi, claiming in the House of Commons earlier this month that the MP had “addressed this matter in full”.
In a letter published by Downing Street on Sunday morning, the prime minister said he had intervened in line with his pledge to ensure his government would have “integrity, professionalism and accountability at every level”.
Sunak asked Sir Laurie Magnus, his ethics adviser, to investigate Zahawi’s tax affairs on Monday after it emerged that the MP had made a settlement of about £5mn to HM Revenue & Customs last summer — including payment of a penalty.
“It is clear that there has been a serious breach of the ministerial code,” Sunak wrote. “As a result, I have informed you of my decision to remove you from your position in His Majesty’s Government.”
Magnus’s investigation found that the former Tory chair started his “interaction” 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 investigation were outside the scope of his review, which instead focused on Zahawi’s handling of the matter and whether he had behaved with the “highest standards of propriety”.
Ministers are required to complete a declaration of interests form — which includes questions about their tax affairs — and ensure that forms are kept up-to-date at all times, while also discussing potential conflicts regularly with their permanent secretaries.
Magnus said Zahawi had thought that his meeting in June 2021 with HMRC was not a formal investigation but “merely being asked certain queries . . . concerning his tax affairs”. Only on July 15 2022 did he receive a letter from the tax authority making it clear there was a probe, the MP had said.
“I consider that an individual subject to the HMRC process faced by Mr Zahawi should have understood at the outset that they were under investigation by HMRC and that this was a serious matter.”
Zahawi should have informed his permanent secretary and sought their advice, he concluded.
“I would likewise expect a minister proactively to update their declaration of interests form to include details of such an HMRC process,” Magnus added.
When Zahawi was appointed chancellor on July 5 last year he completed a declaration of interests form with no reference to the HMRC investigation.
Later Zahawi confirmed that he was in discussion with HMRC to “clarify a number of queries”. Only after receiving HMRC’s letter on July 15 did Zahawi update his declaration of interest — repeating his previous statement that he was clarifying inquiries.
As a result, Zahawi failed to meet a requirement in the ministerial code to declare any interests that might be thought to give rise to a conflict of interest, Magnus concluded.
Zahawi failed to update his declaration of interest form when he agreed a settlement in principle with HMRC in August — waiting until mid-January 2023 to do so.
Last September, he failed to disclose sufficient information to the Cabinet Office, meaning that former prime minister Liz Truss was unaware of the situation when she appointed him to the cabinet. Likewise, Sunak was not fully informed when he gave Zahawi another cabinet job in October. These omissions breached the ministerial code, said Magnus.
The report also criticised Zahawi for claiming on July 10 last year that news reports about him being under investigation were “inaccurate, unfair and are clearly smears”. Under the code, ministers must be open with parliament and the public and not give misleading statements.
Zahawi issued a statement which did not dispute any of the findings, saying he would support Sunak “from the backbenches” in the coming years.
“It has been, after being blessed with my loving family, the privilege of my life to serve in successive governments and make what I believe to have been a tangible difference to the country I love,” he added.
Daisy Cooper, deputy leader of the Liberal Democrats, said Sunak should never have taken so long to act. “Sunak has finally acted after spending days defending the indefensible . . . his first 100 days in office have been tarnished by endless Conservative sleaze and scandals.”