Nadhim Zahawi has agreed to pay millions of pounds in tax to HMRC following a dispute over his family’s financial affairs
The former chancellor has agreed to pay a seven-figure sum to the tax authority to settle a tax dispute totalling £3.7m related to his family trust, Balshore Investments.
In July, HMRC examined the tax affairs of MP Nadhim Zahawi after an inquiry was launched by the National Crime Agency (NCA) in 2020.
The Serious Fraud Office (SFO) had also investigated Zahawi’s finances, according to a report in the Independent.
The investigation probed Zahawi’s involvement in a scheme to avoid tax by using an offshore company to hold shares in YouGov – the polling company he co-founded.
His family trust, Gibraltar-registered Balshore Investments, held a stake worth more than £20m, but sold up in 2018, with the proceeds being transferred to an unknown recipient.
Tax Policy Associates, a think tank, has estimated that Balshore’s sale of YouGov shares should have incurred capital gains tax (CGT) of about £3.7m.
Zahawi has insisted that he ‘does not have, and never has had’ an interest in Balshore Investments and that he was ‘not a beneficiary’.
A spokesperson for Zahawi said: ‘As he has previously stated, Mr Zahawi’s taxes are properly declared and paid in the UK. He is proud to have built a British business that has become successful around the world.’
Contesting the news, Zahawi stated: ‘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 (SFO), the National Crime Agency (NCA), 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.’
Labour chair Anneliese Dodds has said there were ‘serious questions’ for Zahawi to answer, saying: ‘Why did Nadhim Zahawi claim last summer that he had paid his taxes in full, and that he wasn’t aware of an investigation? When was he made aware of an investigation? Was the prime minister aware of an investigation when he appointed Nadhim Zahawi to the cabinet?’
The rate of inflation was down fractionally to 10.5% in December from 10.7% the previous month as energy and food prices remained high
Inflation eased slightly to 10.5% in December, down from 10.7% in November and a 41-year high of 11.1% in October.
The easing in the annual inflation rate reflected price drops in transport costs as petrol and diesel prices fell. There were also limited price falls in clothing and footwear, and recreation and culture, , according to the latest figures from the Office for National Statistics (ONS)..
Prices at restaurants and hotels continued to grow and made the largest impact on the inflation figures, followed by food and soft drinks. Food prices rose 16.8% in the year to December, reaching the highest level seen since 1977.
The current inflation rises in the economy is largely due to supply chain problems linked to Covid-19 and Russia’s invasion of Ukraine, which has exacerbated the cost of energy and all other goods that require energy input.
Annual inflation rates for the consumer price index (CPI) including occupiers’ housing costs (CPIH) rose by 9.2% in the 12 months to December 2022, down from 9.3% in November.
Yael Selfin, chief economist at KPMG UK, said: ‘We expect inflation to continue falling throughout this year, reaching the Bank of England’s 2% target by mid-2024.
‘Falling inflation will also come as a relief to Bank of England’s policymakers who may see this is an opportunity to slow the pace of further rate rises. With the effects of past rate rises still passing through the UK economy, we could see the base interest rate peak at 4% in the first quarter of the year.’
The Bank of England is expected to increase interest rates next month by 0.5% as it struggles to bring inflation down to the 2% target.
Commenting on the figures, ONS chief economist Grant Fitzner, said: ‘Inflation eased slightly in December, although still at a very high level with overall prices rising strongly during the last year as a whole.
‘Prices at the pump fell notably in December, with the cost of clothing also dropping back slightly. However, this was offset by increases for coach and air fares as well as overnight hotel accommodation. Food costs continue to spike with prices also rising in shops, cafes and restaurants.’
Average petrol and diesel prices stood at £1.55 and £1.79 per litre in December and were last lower in February 2022, when petrol was £1.47 per litre, and in April 2022, when diesel was £1.76. Fuel prices rose by 11.5% in December, down from 17.2% in November.
While inflation is easing slightly, there is considerable pressure on households.
Alpesh Paleja, the CBI’s lead economist, said: ‘The cost of living crisis will continue to be a very real problem for both households and businesses, as price pressures remain high in the short term. Against the backdrop of a recession, firms will continue to face higher costs and weak demand conditions.’