Tories were irritated and angered by Zahawi tax row – what has now emerged makes optics even worse

The verdict is in and the decision delivered. Nadhim Zahawi did commit “a very serious breach of the ministerial code” and the prime minister has sacked his party chairman. 

Cue a collective sigh of relief from a parliamentary party irritated and angered that the tax affairs of a multi-millionaire cabinet minister had dominated the headlines for days.

Even before Sir Laurie Magnus concluded that Mr Zahawi had “shown insufficient regard for the general principles of the ministerial code, under the requirements in particular…to be honest, open and an exemplary leader through his own behaviour”, MPs had decided there was only on course of events: that Mr Zahawi had to go.

Because the spectacle of a cabinet minister and former chancellor, who had £27m of wealth that he didn’t initially pay tax on, when people are struggling to make ends meet, just doesn’t pass the sniff test.

Zahawi fired as Tory party chairman – politics latest

But what emerged on Sunday makes the optics worse still: We know that Mr Zahawi did end up settling with the HMRC, reportedly paying a £5m sum (including a penalty).

But what we didn’t know is how long the “interaction” with HMRC was going on undeclared, while Mr Zahawi was serving as a government cabinet minister and running for the Conservative party leadership.

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0:33 The interview PM’s ethics adviser has questioned

Sir Laurie’s investigation found this dispute had begun in April 2021 and was settled in August 2022.

There is stinging criticism from the PM’s ethics advisor as to why Mr Zahawi didn’t treat questions over his tax affairs back in April 2021 as a “serious” matter.

He did not disclose the HMRC investigation on his appointment as education secretary on 15 September 2021, or when he was appointed Boris Johnson’s chancellor on 5 July 2022.

It was only on 15 July 2022 that the cabinet minister updated his declaration of interests acknowledging his tax affairs were under investigation after receiving a letter from HMRC.

There was also the matter of Mr Zahawi, during the Conservative leadership contest last July, dismissing reports about his tax affairs as “inaccurate, unfair and clearly smears”.

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10:29 Zahawi sacking is ‘brutal’

Sir Laurie took a very dim view of Mr Zahawi failing to correct the record and disclose he had reached a settlement with HMRC until 21 January.

“I consider that this delay in correcting in an untrue public statement is inconsistent with the requirements of openness,” he said.

For the government’s critics, the whole sorry affair will be used to attack the ruling Conservatives as the party of sleaze.

Juxtapose what has just happened with Mr Zahawi over his tax affairs with the PM’s commitment to lead a government of “integrity, professionalism and accountability”.

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His opponents will be able to argue that far from cleaning up government, the prime minister has inserted people into his top team at odds with those values, be that Gavin Williamson, forced to resign over bullying allegations, the sacked Mr Zahawi or deputy PM Dominic Raab, who is being investigated over eight bullying allegations.

Mr Sunak’s allies argue that all the PM can do is stick to his word, make his government accountable and earn the public’s trust in the way he handles what is thrown at him.

“This is why the PM wanted to have a proper process where the facts where established,” one ally told me on Sunday.

“The timeline is now in the public domain for everyone to see. It provides Nadhim Zahawi with an opportunity to explain himself and it also determines what went on when.”

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0:38 PM took ‘decisive action’ on Zahawi, says Gove

Cleaning up the mess of others, Mr Sunak will hope that what the public see is him doing the right thing.

But these things aren’t so clear.

The PM might not have known about Mr Zahawi’s tax affairs but what did he know, if anything, of accusations around bullying by Mr Williamson or Mr Raab before he put them into his cabinet?

Read more:What did Nadhim Zahawi do?Will the curse of the cabinet awayday spark doom for Sunak?

What the new Conservative administration can at least lay claim to is that Mr Sunak is taking a very different approach to that of Boris Johnson, who saw two independent ethics advisors quit his government in less than two years.

Lord Geidt dramatically quit in June 2022 after conceding the PM might have broken the ministerial code over partygate. His predecessor Alex Allen resigned in 2020 after Mr Johnson backed former home secretary Priti Patel, despite Mr Allen’s report finding her to have breached the ministerial code for allegedly bullying civil servants.

Mr Sunak, in appointing an independent ethics advisor and then following his advice, is trying to demonstrate that the workings of Mr Johnson and his own are chalk and cheese.

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2:13 What is going on with Zahawi’s taxes?

As for Mr Zahawi, it was – as one minister put it to me – “totally the right decision”, with little internal protest (I’m told the WhatsApp groups are silent) from a party that wants to put the damaging affair behind it.

Read more:Who is Nadhim Zahawi? The politician sacked over his tax affairsFrom Zahawi and Raab to seatbelt gaffe – the scandals of PM’s first months

On Monday, the prime minister will be outlining his emergency care plan, trying to show the public that he is focused on their priorities.

But it’s true too that this PM’s first 100 days – which will be marked this Thursday – has been more associated with scandals than it has with good governance.

Plenty of easy attack lines for Labour, and for the PM even more ground to make up.