Nadhim Zahawi sacked: Rishi Sunak tax probe and independent adviser letters in full

An ethics investigation found Nadhim Zahawi was in “serious breach” of the ministerial code. Credit: PA

The Prime Minister has sacked Nadhim Zahawi as Tory Chairman after an ethics investigation found he was in “serious breach” of the ministerial code.

Here are the letters from Rishi Sunak to Mr Zahawi, from the independent adviser on ministers’ interests, Sir Laurie Magnus to Mr Sunak and Mr Zahawi’s response in full.

  • Rishi Sunak to Nadhim Zahawi

Dear Nadhim

When I became Prime Minister last year, I pledged that the Government I lead would have integrity, professionalism and accountability at every level.

That is why, following new information which came to light in recent days regarding your personal financial arrangements and declarations, I asked Sir Laurie Magnus, the independent adviser on ministers’ interests, to fully investigate this matter. You agreed and undertook to co-operate fully with the inquiry.

Following the completion of the independent adviser’s investigation – the findings of which he has shared with us both – it is clear that there has been a serious breach of the ministerial code. As a result, I have informed you of my decision to remove you from your position in His Majesty’s Government.

Mr Sunak and his Government had faced questions for several days about the row, with growing pressure on Mr Zahawi to stand aside. Credit: PA

As you leave, you should be extremely proud of your wide-ranging achievements in Government over the last five years. In particular, your successful oversight of the Covid-19 vaccine procurement and deployment programme which ensured the United Kingdom was at the forefront of the global response to the coronavirus pandemic.

Your role was critical to ensuring our country came through this crisis and saved many lives. And as the Conservative Party Chairman, you have undertaken significant restructuring to Conservative Campaign Headquarters and readied us for important work in the coming months.

It is also with pride that I, and previous prime ministers, have been able to draw upon the services of a Kurdish-born Iraqi refugee at the highest levels of the UK Government. That is something which people up and down this country have rightly valued.

I know I will be able to count on your support from the backbenches as you continue to passionately and determinedly serve your constituents of Stratford-on-Avon and represent the many issues and campaigns you are dedicated to. Thank you for your service to this and previous governments.

Yours sincerely

Rishi Sunak

  • Sir Laurie Magnus to Rishi Sunak

Dear Prime Minister,


1. You have asked me to review the circumstances and facts concerning certain tax affairs of the Rt Hon Nadhim Zahawi, Minister Without Portfolio, and that I assess these circumstances in the context of Mr Zahawi’s obligations under the ministerial vode.

2. This report sets out relevant facts that I have established whilst respecting Mr Zahawi’s right to taxpayer confidentiality. It provides my assessment of the minister’s conduct under the ministerial code, both in terms of its specific provisions and its overriding principles.

3. I should acknowledge that the Minister Without Portfolio has provided his full and open co-operation in assisting with my inquiries. I am also grateful for the assistance I have received from officials at HM Revenue & Customs (HMRC) and the Cabinet Office.

Sir Laurie Magnus in 2016 Credit: David Parry/PA

Scope of work and areas of inquiry

4. The matter under review concerns the fact that Mr Zahawi was the subject of an HMRC investigation that resulted in a determination that tax was owed and that a penalty should be applied, falling into the HMRC category of “lack of reasonable care”. Mr Zahawi and HMRC have confirmed to me that this matter was resolved in principle in August 2022 with a settlement agreement signed in September 2022.

5. The technical detail of HMRC’s investigation and their determination is outside my scope. I have focused on Mr Zahawi’s handling of the matter in light of his responsibilities as a minister who is subject to the provisions of the ministerial code. The ministerial code makes clear that ministers are expected to “maintain high standards of behaviour and to behave in a way that upholds the highest standards of propriety”, observing the Seven Principles of Public Life and having an “overarching duty… to comply with the law and to protect the integrity of public life”.

6. As well as considering the above overarching obligations, I have considered three specific areas under the Code:

i) How the existence of an ongoing HMRC investigation was declared by Mr Zahawi with reference to his obligations under chapter 7 of the ministerial code (up to August 2022).

ii) How the settlement of the HMRC investigation was declared by Mr Zahawi (from August 2022), and in particular in relation to his current role as Minister Without Portfolio.

iii) The accuracy of public statements made by Mr Zahawi in relation to the matter, in view of his obligations under the ministerial code to be open and honest.

Nadhim Zahawi Credit: Kirsty O’Connor/PA


Declarations of ministerial interests

7. The ministerial code sets out that “ministers must ensure that no conflict arises, or appears to arise, between their public duties and their private interests”. All ministers are subject to an extensive and rigorous framework, designed to provide clear guidance on how interests are declared and handled. This includes a requirement that ministers complete declaration of interests forms (which include questions about the status of their tax affairs), ensuring these are kept up to date at all times, and also discuss potential conflicts and other relevant matters on an ongoing basis with their permanent secretary. Ministers are also expected to disclose any relevant issues, including those which might give rise to possible conflicts, during the process of their appointment to any ministerial role. As a minister of long standing, Mr Zahawi has operated within this framework over a significant period and should be familiar with its requirements.

Declaration of interests – HMRC investigation

8. With Mr Zahawi’s agreement, I have met with HMRC and received some details, including the timing, of his interaction with them. This commenced in April 2021 and included a meeting which he and his advisers attended with them in June 2021. Mr Zahawi has told me that he had formed the impression that he and his advisers were merely being asked certain queries by HMRC concerning his tax affairs, and that this impression persisted until he received a letter from HMRC on 15th July 2022 (dated 13th July). The principle of taxpayer confidentiality continues to apply. However, on the basis of the confidential information to which I have had access, including correspondence between HMRC and Mr Zahawi personally, I consider that an individual subject to the HMRC process faced by Mr Zahawi should have understood at the outset that they were under investigation by HMRC and that this was a serious matter.

9. I consider that an HMRC investigation of the nature faced by Mr Zahawi would be a relevant matter for a minister to discuss and declare as part of their declaration of interests. I would expect a minister to inform their permanent secretary and to seek their advice on any implications for the management of their responsibilities. I would likewise expect a minister proactively to update their declaration of interests form to include details of such an HMRC process.

10. After his appointment as Chancellor on 5th July 2022, Mr Zahawi completed a declaration of interests form which contained no reference to the HMRC investigation. A later form acknowledged (by way of an attachment) that Mr Zahawi was in discussion with HMRC to clarify a number of queries. Only following receipt of HMRC’s letter received on 15th July 2022 (dated 13th July), did Mr Zahawi update his declaration of interests form to acknowledge that his tax affairs were under investigation, but he provided no further details other than the statement made previously that he was clarifying queries.

11. Given the nature of the investigation by HMRC, which started prior to his appointment as Secretary of State for Education on 15th September, 2021, I consider that by failing to declare HMRC’s ongoing investigation before July 2022 – despite the ministerial declaration of interests form including specific prompts on tax affairs and HMRC investigations and disputes – Mr Zahawi failed to meet the requirement (at paragraph 7.3 of the ministerial code) to declare any interests which might be thought to give rise to a conflict.

Declaration of interests – settlement of tax matter and penalty

12. Following an in-principle agreement in August 2022, in September 2022 Mr Zahawi and HMRC reached a final settlement of his tax investigation. As Mr Zahawi has intimated in his public statement of 21st January 2023, the settlement included a penalty applied on the basis of “carelessness” which, in this context, according to the HMRC compliance handbook, indicates an individual’s failure to take “reasonable care” in relation to their tax affairs.

13. As set out at paragraph 11, I consider that Mr Zahawi should previously have declared the fact of the investigation. The subsequent fact that the investigation concluded with a penalty in relation to the tax affairs of a minister also requires declaration and discussion. It is a relevant interest which could give rise to a conflict, and particularly so in the case of HM Treasury ministers and the Chancellor of the Exchequer, who has responsibility for the UK tax system. As a result of my inquiries, I conclude that Mr Zahawi failed to update his declaration of interest form appropriately after this settlement was agreed in principle in August 2022. It was not until mid-January 2023 (see paragraph 16) that details of the earlier HMRC investigation and its outcome were declared.

14. I also conclude that, in the appointments process for the governments formed in September 2022 and October 2022, Mr Zahawi failed to disclose relevant information – in this case the nature of the investigation and its outcome in a penalty – at the time of his appointment, including to Cabinet Office officials who support that process. Without knowledge of that information, the Cabinet Office was not in a position to inform the appointing Prime Minister.

15. Taken together, I consider that these omissions constitute a serious failure to meet the standards set out in the ministerial code.

16. Mr Zahawi informed me that on 16th January 2023 he submitted, to his permanent secretary, his declaration of interests form in relation to his current role as Minister Without Portfolio, to which he was appointed on 25th October 2022, and that in that form he included detail of the outcome of the HMRC investigation. At the time of my investigation this declaration was under consideration by the permanent secretary and had yet to be submitted onward to me for consideration. Given the seriousness of this matter, I would have expected Mr Zahawi to attend to his submission much more rapidly and, as stated in paragraph 14 above, to have notified Cabinet Office officials at the time of his appointment.

Public statements

17. On 10th July 2022, following media speculation, Mr Zahawi made a public statement. He said: “There have been news stories over the last few days which are inaccurate, unfair and are clearly smears. It’s very sad that such smears should be circulated and sadder still that they have been published.

“These smears have falsely claimed that the Serious Fraud Office, the National Crime Agency, and HMRC are looking into me. Let me be absolutely clear. I am not aware of this. I have not been told that this is the case.

“I’ve always declared my financial interests and paid my taxes in the UK. If there are questions, of course, I will answer any questions HMRC has of me.”

18. Mr Zahawi has told me that at the time of this statement, he was under the impression that he was answering HMRC’s queries, but that he was not under investigation. As set out in paragraph 8, I consider that an individual subject to the HMRC process faced by Mr Zahawi should have understood that they were under investigation by HMRC and that this was a serious matter.

19. Under section 1.3(d) of the ministerial code, ministers have a duty to “be as open as possible with Parliament and the public”. Whilst this duty clearly does not extend to disclosing personal tax information, it does include a general duty to be accurate in statements to ensure a false impression is not given or maintained.

20. Mr Zahawi did not correct the record until 21st January 2023, when Mr Zahawi’s public statement indicated that he had reached a settlement with HMRC following an investigation. I consider that this delay in correcting an untrue public statement is inconsistent with the requirement for openness.

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21. The general principles of the ministerial code are very clear. Paragraph 1.1 states, “ministers of the Crown are expected to maintain high standards of behaviour and to behave in a way that upholds the highest standards of propriety”. Paragraph 1.3 states, “The ministerial code should be read against the background of the overarching duty of ministers to comply with the law and to protect the integrity of public life. They are expected to observe the seven principles of public life”. One of the Seven Principles of Public Life is leadership, which requires that holders of public office should not only exhibit the principles in their own behaviour but also actively promote and robustly support the principles.

22. A minister of the Crown has a responsibility to lead by example, demonstrating not just compliance with the ministerial code, but being an exemplar for integrity in public life. This means upholding high standards of propriety in their conduct as citizens and being actively conscious of possible conflicts between their private interests (financial or otherwise) and their ministerial responsibilities. Paragraph 7.2 of the ministerial code states that, “It is the personal responsibility of each minister to decide whether and what action is needed to avoid a conflict or the perception of conflict”.

23. I consider that Mr Zahawi, in holding the high privilege of being a minister of the Crown, has shown insufficient regard for the general principles of the ministerial code and the requirements in particular, under the seven principles of public life, to be honest, open and an exemplary leader through his own behaviour. I want to commend Mr Zahawi for his willingness to assist with my inquiry. I also fully appreciate the pressures faced by ministers as they address the complex issues of government and the difficulties they encounter in balancing the demands of their personal lives and their ministerial responsibilities. These factors, however, cannot mitigate my overall judgement that Mr Zahawi’s conduct as a minister has fallen below the high standards that, as Prime Minister, you rightly expect from those who serve in your Government.

Yours sincerely,

Sir Laurie Magnus CBE

Independent Adviser on Ministers’ Interest

Rishi Sunak defended Nadhim Zahawi at PMQs. Credit: PA
  • Nadhim Zahawi to Rishi Sunak

Dear Prime Minister,

Thank you for your kind words. It has been, after being blessed with my loving family, the privilege of my life to serve in successive Governments and make what I believe to have been a tangible difference to the country I love.

I arrived in this country fleeing persecution and speaking no English. Here, I built a successful business and served in some of the highest offices in government. I believe that in no other country on earth would my story be possible. It reaffirms my belief in the greatness and compassion of our nation.

I take particular pride in two achievements in government. First, the vaccine rollout. This saved huge numbers of lives. It is also what has allowed us to move beyond Covid and get our economy and society moving again. I believe there are wider lessons for government in the success of this programme. Policy making and delivery are normally treated as two separate processes. In the vaccine rollout, they were combined, and I think that accounts for why it worked so well. If we could apply this model to other parts of government, I believe it could have transformative results.

The second was my role in the mourning period for Her Late Majesty Queen Elizabeth II. Those days, that celebration of her life of service represented so much of what is best about our country. I was honoured that as Chancellor of the Duchy of Lancaster I could help ensure that everything went smoothly and that as many people as possible could pay their respects and tributes to our longest serving monarch.

I am concerned, however, about the conduct from some of the fourth estate in recent weeks. In a week when a Member of Parliament was physically assaulted, I fail to see how one headline on this issue ‘The Noose Tightens’ reflects legitimate scrutiny of public officials. I am sorry to my family for the toll this has taken on them.

You can be assured of my support from the backbenches in the coming years. Your five priorities are the right priorities, and I will do whatever I can to help you deliver them.


Rt Hon Nadhim Zahawi MP