Sunak says 'no issues' raised when Zahawi appointed party chairman amid tax row

ITV News' Amy Lewis and Anushka Asthana report on the latest sleaze allegations engulfing the government

Rishi Sunak has reiterated that he did not know anything about the tax affair furore surrounding Nadhim Zahawi when he appointed him as Conservative Party chairman, insisting "no issues" were raised with him.

The prime minister said that "there are questions to answer" though because new information had emerged and the former chancellor had chosen to speak publicly on the saga.

It comes as the boss of HM Revenue & Customs (HMRC), Jim Harra, told MPs that there are "no penalties for innocent errors", while being questioned on Mr Zahawi’s tax affairs.

Ahead of Mr Harra's appearance before the Public Accounts Committee on Thursday, ITV News Political Editor Robert Peston understands that Mr Zahawi wrote to him, instructing him to share all and any information on his tax affairs requested by the prime minister’s independent advisor on ministers’ interests, Sir Laurie Magnus.

Sir Laurie has been ordered by Mr Sunak to investigate whether Mr Zahawi broke ministerial rules over an estimated £4.8 million bill he settled with HMRC while he was chancellor.

The row surrounding Mr Zahawi centres on a tax bill over the sale of shares in YouGov, the polling firm Mr Zahawi founded, worth an estimated £27 million which were held by Balshore Investments, a company registered offshore in Gibraltar and linked to Mr Zahawi’s family.

Downing Street has said it did not know last week that Mr Zahawi had paid a reported 30% penalty to HMRC.

Speaking on Thursday, Mr Sunak refused to answer questions on the future of Mr Zahawi, instead saying he believes in "due process".

 'When I appointed Nadhim Zahawi to his current job no issues were raised with me about that appointment'

He said: "I believe we should have integrity in politics and we should do that in a professional way where we have an independent person look at all the facts and provide advice. That’s the long established process that we have and that’s the process that I’m following."

Mr Zahawi has said that HMRC concluded there had been a "careless and not deliberate" error in the way the founders’ shares, which he had allocated to his father, had been treated.

He also insisted he is "confident" he has "acted properly throughout".

During his appearance in front of MPs, Mr Harra was pressed on some of the questions surrounding the tax arrangements for the embattled Tory party chair.

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He was at pains to stress that he could not comment on individual cases, but did tell MPs that penalties were not applied for what he termed "innocent" tax mistakes.

Mr Harra told MPs: "Carelessness is a concept in tax law. It can be relevant to how many back years that we can assess, can be relevant to whether someone is liable to a penalty and if so, what penalty they will be liable to for an error in their tax affairs.

"There are no penalties for innocent errors in your tax affairs.

"So if you take reasonable care, but nevertheless make a mistake, whilst you will be liable for the tax and for interest if it’s paid late, you would not be liable for a penalty.

HMRC chief executive Jim Harra appeared before MPs on Thursday. Credit: PA

"But if your error was as a result of carelessness, then legislation says that a penalty could apply in those circumstances."

He also suggested that there could be certain specific circumstances where he could appear before the committee to discuss some details of a minister’s tax affairs, as he said he would aid the ethics inquiry into Mr Zahawi any way he could.

"It would not be normal for me to account to this committee for a person’s tax affairs, but if there are general issues about how we manage tax and I’ve got the ability to be disclosive that’s obviously something I would take advantage of," he added.

"If we are asked by the independent adviser on ministerial interests to help with the inquiry, we will do so in any way we possibly can."

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