How the PM’s ethics adviser will decide if Zahawi should quit

Nadhim Zahawi faces further scrutiny over his tax affairs. Credit: PA

The big question about Tory chairman Nadhim Zahawi, that will determine whether he stays in government - and is being adjudicated by the PM’s new ethics advisor, Sir Laurie Magnus - is simple.It is whether Zahawi was as open and honest about his tax affairs as he should have been, when Cabinet Office officials asked about them prior to Boris Johnson appointing him as Chancellor.And then, having become Chancellor, did he tell the then Treasury permanent secretary Sir Tom Scholar about the potential conflict of interest of his tax settlement negotiations with HMRC?Failure to properly inform the Treasury perm sec, the Cabinet secretary or officials in the Cabinet Office’s propriety and ethics team, would all be breaches of the ministerial code of conduct. And normally a breach of that sort would force a minister to quit.For what it’s worth, officials are telling me they weren’t fully in the picture. But Zahawi says he did share relevant information with the Cabinet office. It is for Magnus to assess whether he revealed enough.The code also includes a requirement for straight dealing by ministers in statements to the media. So here is another question for Magnus to consider.The Tory chair Zahawi has repeatedly said his taxes “were and are” up to date, and that he was “not a beneficiary of an offshore trust”. He and his spokespeople have made statements to this effect to Sky, the FT, the BBC, the Times and so on.But Zahawi’s HMRC settlement - almost £5m, consisting of back taxes and a 30% penalty - means that by definition his taxes were not up to date, and also he was a beneficiary of the YovGov shares that were held offshore by a Gibraltar entity.How is the HMRC settlement consistent with his definitive previous statements?He didn’t say he hoped his taxes were up to date, subject to an HMRC agreement, or that HMRC was examining whether shares held offshore in his father’s name more properly belonged to him.He just told anyone who asked that there was nothing to see here and no reason to press him on it.So the question here for Magnus is, did Zahawi mislead, and if he did was that accidental or deliberate (and as I mentioned on ITV’s Evening News, this uncertainty over whether ministers have misled intentionally or as cock-up has been something of a theme since Johnson won the 2019 election).

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