Dan Neidle is the founder of Tax Policy Associates, a think tank established to improve British tax policy.
The internet is full of people slandering Conservative politicians with false claims they’ve avoided tax:
So it was understandable that, when I published accusations that Nadhim Zahawi, then Chancellor of the Exchequer, had failed to pay almost £4m of tax, many Tories were sceptical. Particularly given that I was a member of the Labour Party’s most senior disciplinary body.
And when Zahawi denied my accusation, and threatened me and others with libel writs, it’s understandable that most Tories’ sympathies lay with him rather than me.
That changed in January 2023, when the Sun published an amazing scoop: at the same time that Zahawi was paying lawyers to write to me saying that all his tax was properly paid, and he wasn’t being investigated by HMRC, he was in the midst of negotiations to settle an HMRC investigation, and pay about £4m of tax plus a £1m penalty.
Rishi Sunak referred the matter to Sir Laurie Magnus, his ethics adviser. Sir Laurie concluded that Zahawi had made false statements to the Cabinet Office and the public, and the Prime Minister promptly sacked him.
Since then, Zahawi has been rather quiet. But this week two things happened. First, the Solicitors Regulatory Authority decided to bring a prosecution against Mr Zahawi’s lawyers for unethically attempting to silence me. And the next day – perhaps coincidentally, perhaps not – Zahawi announced he’d stand down as an MP at the next election.
What should Conservatives make of him now?
He is in many respects an impressive figure. I don’t think any other MP has built a £1bn business from nothing (with the possible exception of Robert Maxwell, who I’m sure the Labour Party would prefer to forget). His time as Vaccine Minister is hard to describe as anything other than a triumph. Civil servants speak admiringly of him.
I wouldn’t be too judgmental about the fact he entered into a rather silly (and doomed) tax avoidance structure 24 years ago. He was a young businessman, and it doesn’t seem like he was receiving professional tax advice; my guess is that he was naively following someone else’s suggest (perhaps his father’s).
His failure to obtain proper advice in subsequent years is more questionable, and it’s unsurprising he ended up paying an unusually high penalty.
Our sympathy should end at the point when, knowing that he was being investigated by HMRC and likely owed £4m in tax, he tried to cover it up by sending lawyers to threaten the press for reporting what he knew to be the truth.
Zahawi says that “on reflection, maybe he should have been clearer” that he was under investigation from HMRC. Lack of clarity wasn’t the problem. The legal threats he sent me and others were very clear.
They were also based upon two falsehoods: that he wasn’t being investigated by HMRC, when he knew that he was; and that his tax was fully paid, when he was about to sign a settlement admitting that it wasn’t.
Zahawi has never taken responsibility for his actions, much less apologised. It’s time that he did.
