Former Chancellor Nadhim Zahawi to pay several million in tax after scrutiny of his family’s offshore company accounts

Former chancellor Nadhim Zahawi claims of politically motivated ‘smears’ result in a multi-million tax settlement after a probe into family-owned offshore accounts by HM Revenue and Customs.

Last year Zahawi was both chancellor and running for the Tory leadership when a senior Whitehall source confirmed that the tax matter with the HMRC was “unresolved”.

The initial NCA inquiry was codenamed “Operation Catalufa” and is understood to have involved the agency’s International Corruption Unit.

At the time Nadhim Zahawi hit out at what he described as “smears” over his tax affairs, saying he does not benefit from an offshore trust and has never held non-domicile status.

The then-newly appointed Chancellor denounced “inaccurate” and “unfair” reports in the media, adding that he has answered the allegations in the interest of transparency.

He went on to state: “If he is made prime minister, he pledged to publish his tax return annually.” Of course, these were historical tax issues and any future annual publications of his tax would not show any inaccuracies.

It was The Independent that reported that the Chancellor’s finances were being investigated by HMRC after a secret inquiry was initially launched in 2020 by the National Crime Agency (NCA). The newspaper also said the Serious Fraud Office (SFO) investigated Mr Zahawi’s financial affairs.

But in a statement released in response to that claim, the senior Cabinet minister dismissed the allegations as “smears.”

Quite obviously those so-called smears had merit, now the former Chancellor Nadhim Zahawi has reportedly agreed to pay several million pounds to the taxman following an investigation into his family business.

According to the Sun on Sunday, the probe looked into his family trust, Gibraltar-registered Balshore Investments, which sold a £20 million stake in YouGov in 2018.

There is no corporate tax for any non-resident-based companies. This is primarily the reason why Gibraltar can be considered a tax haven.

YouGov has described Balshore Investments as “a family trust of Nadhim Zahawi”. The former chancellor has insisted “he does not have, and never has had, an interest in Balshore Investments and he is not a beneficiary”.

However, Zahawi claiming he does not benefit from the trust was counter to the fact according to the paper that accounts showed some of its dividends were used to pay money to YouGov on his behalf. Experts said this meant the sale could have been liable to capital gains tax.

Tax Policy, a thinktank, has estimated that Balshore’s sale of YouGov shares should have incurred capital gains tax of about £3.7m.

Asked whether Zahawi was paying millions to HM Revenue and Customs, his spokesperson 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.”

They added: ‘As he has previously stated, his taxes are properly declared and paid in the UK.’ 

That begs the question of why Nadhim Zahawi has agreed to pay HMRC several million pounds in tax if he has done nothing wrong.

Benefit Fraud

Common law, Fraud Act 2006, s.1, Social Security Administration Act 1992, s.111A, Social Security Administration Act 1992, s.112, Tax Credits Act 2002, s.35, Theft Act 1968, s.17

Effective from: 1 October 2014

Dishonest representations for obtaining benefit etc, Social Security Administration Act 1992 (section 111A)
Tax Credit fraud, Tax Credits Act 2002 (section 35)
False accounting, Theft Act 1968 (section 17)
Triable either way
Maximum: 7 years’ custody
Offence range: Discharge – 6 years 6 months’ custody

False representations for obtaining benefit etc,  Social Security Administration Act 1992 (section 112)
Triable summarily only
Maximum: Unlimited fine and/or 3 months’ custody
Offence range: Discharge – 12 weeks’ custody

Fraud by false representation, fraud by failing to disclose information, fraud by abuse of position, Fraud Act 2006 (section 1)
Triable either way

Conspiracy to defraud, Common law
Triable on indictment only
Maximum: 10 years’ custody
Offence range: Discharge – 8 years’ custody

Multi-millionaire tax dodging, carry on regardless!