Nadhim Zahawi claims error with his taxes ‘careless not deliberate’

The Tory party chair, Nadhim Zahawi, has said HMRC concluded his tax errors were “careless and not deliberate” after reports that he paid a penalty as part of a multimillion-pound settlement.

The former chancellor, who still attends Rishi Sunak’s cabinet, released a statement to “address some of the confusion about my finances” after it emerged he had agreed to pay millions to the tax agency in December.

Zahawi’s comments came after the Guardian reported he had paid a 30% penalty as part of an estimated total tax bill of almost £5m.

He said: “As a senior politician I know that scrutiny and propriety are important parts of public life. Twenty-two years ago I co-founded a company called YouGov.

“I’m incredibly proud of what we achieved. It is an amazing business that has employed thousands of people and provides a world-beating service.

“When we set it up, I didn’t have the money or the expertise to go it alone. So I asked my father to help. In the process, he took founder shares in the business in exchange for some capital and his invaluable guidance.

“Twenty-one years later, when I was being appointed chancellor of the exchequer, questions were being raised about my tax affairs. I discussed this with the Cabinet Office at the time.

“Following discussions with HMRC, they agreed that my father was entitled to founder shares in YouGov, though they disagreed about the exact allocation. They concluded that this was a ‘careless and not deliberate’ error.”

Penalties are applied if someone does not pay the correct tax at the right time.

“So that I could focus on my life as a public servant, I chose to settle the matter and pay what they said was due, which was the right thing to do,” he said.

“Additionally, HMRC agreed with my accountants that I have never set up an offshore structure, including Balshore Investments, and that I am not the beneficiary of Balshore Investments.

“This matter was resolved prior to my appointments as chancellor of the duchy of Lancaster and subsequently chairman of the party I love so much. When I was appointed by the prime minister, all my tax affairs were up to date.”

Labour’s deputy leader, Angela Rayner, called for an explanation earlier on Saturday. “I believe his position is untenable,” she said. “If he’s lied and misled the public and HMRC regarding his tax affairs then I think his position is untenable.”