Nadhim Zahawi: Sunak orders investigation amid tax questions
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Nadhim Zahawi has not made an “innocent error” in his tax affairs, the boss of HMRC has suggested. HMRC chief executive Jim Harra told the Public Accounts Committee this morning that “there are no penalties for innocent errors in your tax affairs”.
Mr Harra appeared before MPs where he was due to discuss tax compliance and the pandemic but was pressed on some of the questions surrounding the tax arrangements for the embattled Tory party chair.
He insisted he could not comment on individual cases but said that penalties were not applied for what he termed “innocent” tax mistakes.
Mr Harra said: “I am not commenting on any particular person’s affairs but carelessness is a concept in tax law.
“It can be relevant to how many back years that we can assess and it can be relevant to whether someone is liable to a penalty and if so, what penalty they will be liable to for an error in their tax affairs.
“There are no penalties for innocent errors in your tax affairs.
“So if you take reasonable care, but nevertheless make a mistake, whilst you will be liable for the tax and for interest if it’s paid late, you would not be liable for a penalty.
“But if your error was as a result of carelessness, then legislation says that a penalty could apply in those circumstances.”
The row surrounding Mr Zahawi centres on a tax bill over the sale of shares in YouGov, the polling firm Mr Zahawi founded, worth an estimated £27 million which were held by Balshore Investments, a company registered offshore in Gibraltar and linked to Mr Zahawi’s family.
Downing Street has said it did not know last week that Mr Zahawi had paid a reported 30 percent penalty to HMRC.
Mr Zahawi has said that HMRC concluded there had been a “careless and not deliberate” error in the way the founders’ shares, which he had allocated to his father, had been treated.
He also insisted he is “confident” he has “acted properly throughout”.
Rishi Sunak has ordered an investigation by Sir Laurie Magnus, his independent adviser on ministers’ interests, into whether Mr Zahawi broke ministerial rules over the estimated £4.8 million bill he settled with HMRC while he was chancellor.
The Prime Minister, who is hosting an away day with Cabinet colleagues at Chequers, was grilled on the furore by Labour leader Sir Keir Starmer during PMQs yesterday.
Mr Sunak told MPs that while it would have been “politically expedient” to sack Mr Zahawi, “due process” meant that the investigation into his tax affairs should be allowed to reach its conclusion.
Downing Street has not set a timeline or indicated the pace of the inquiry, only saying it hoped Sir Laurie could report back “swiftly”.
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