Government ethics team raised Zahawi’s tax affairs with then PM when he was appointed chancellor

Labour has called on the former chancellor to be sacked, as ITV News Political Correspondent Carl Dinnen reports

The government’s propriety and ethics team raised the issue of Nadhim Zahawi’s tax affairs directly with Boris Johnson before he was appointed as chancellor, ITV News can reveal. Sources said that officials in the Cabinet office told the then prime minister about the questions surrounding his dispute with HMRC at the time of appointment, in July 2022. Whatever discussion was had, Mr Johnson went ahead with the appointment - placing Mr Zahawi in charge of the country's taxation. It comes after Mr Zahawi, now Conservative party chair, admitted today that reports he had paid back paying millions of pounds in tax to HMRC were correct.

He has not denied the suggestion that around £1m of the total was a penalty fee.

Saying he wanted to address "confusion" over his finances, Mr Zahawi admitted that HMRC had disagreed with him about the allocation of founder shares in the polling company he helped to set up - Yougov - his father was entitled to.

"Twenty one years later, when I was being appointed Chancellor to the Exchequer, questions were being raised about my tax affairs. I discussed this with the Cabinet office at the time." He said the HMRC accepted that he had made a "careless and not deliberate error". "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."

ITV News has been told those questions were relayed to Mr Johnson, who appointed Mr Zahawi at a critical point in his premiership when he was facing mass resignations by ministers - including the previous chancellor, Rishi Sunak. Mr Johnson was desperate to try to hold his government together. The Labour Party has called for Mr Sunak to sack the Tory chair - with deputy leader Angela Rayner saying his position is now untenable.

The Lib Dems have called for an independent investigation - accusing the Conservatives of trying to "brush this under the carpet".

The issue was clearly also known by government when Mr Zahawi was appointed Conservative chair by Mr Sunak.

A Cabinet Office Spokesperson said: “We would not comment on private discussions between any Prime Minister and officials."

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