Chancellor Nadhim Zahawi has vowed to publish his tax returns if he wins the Conservative Party leadership contest and becomes prime minister, following The Independent’s revelation that HMRC experts are investigating his financial affairs.
The leadership hopeful claimed to be the victim of a “smear” campaign – but vowed to “answer any questions that HMRC has of me” and publish his accounts annually if he succeeds Boris Johnson at No 10.
Conservative Party leadership candidates Sajid Javid and Jeremy Hunt have also pledged to open up their tax affairs if they make it to the final stage of the Tory leadership race.
Mr Javid said he had “no issue” with tax transparency, and pointed out that he had “never been investigated” in an apparent swipe at his rival.
Suggesting that political enemies were trying to thwart his bid to become PM, Mr Zahawi told Sky News on Sunday that he had not been aware of an investigation.
“So I was clearly being smeared. I was being told that the Serious Fraud Office, that the National Crime Agency, that HMRC are looking into me,” he said, adding: “I was not aware of this, I have always paid my taxes, I have declared my taxes in the UK.”
Promising to cooperate with authorities, Mr Zahawi added: “I will answer any questions that HMRC has of me.”
The chancellor added: “But I will go further. I am going to make a commitment today that, if I am prime minister, I think the right thing to do is publish my accounts annually.”
The Independent revealed that Mr Zahawi’s finances had been investigated by the National Crime Agency in 2020.
Inquiries were also made by the Serious Fraud Office before the investigation was passed to HMRC, which falls under the department which Mr Zahawi now runs. A senior Whitehall source, as revealed by The Independent on Saturday, confirmed that the tax probe is currently “unresolved”.
The Independent also revealed that Boris Johnson, home secretary Priti Patel and the Cabinet Office were all informed of the investigations.
The Observer separately reported that the Cabinet Office’s propriety and ethics team alerted Boris Johnson to a HMRC “flag” about Mr Zahawi’s finances before he was promoted.
In a statement on Sunday evening, Mr Zahawi said: “There have been news stories over the last few days which are inaccurate, unfair and clearly smears.”
He added: “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 have 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.”
Earlier on Sunday, Mr Javid, who quit Mr Johnson’s government earlier this week, told the BBC that he believes that the final two leadership candidates should be “quite open” about their tax affairs.
He also sought to defend his own use of non-domicile tax status, which allowed him to avoid paying UK tax on his overseas income, before he entered politics.
It emerged earlier this year that the former health secretary had enjoyed non-dom tax status in the early 2000s when he was working for Deutsche Bank.
Asked how long he had taken advantage of such arrangements, Mr Javid told the BBC’s Sunday Morning programme: “I think for about for four or five years, before public life, it was the 2000s.”
The former cabinet minister, believed to have qualified for the scheme because his father was born in Pakistan, said: “I had a job that was very international … that is why my tax affairs were very international.”
The Independent first revealed in April that then chancellor Rishi Sunak’s wife avoided UK tax on her overseas income through her non-dom status.
Mr Hunt said that neither he nor his wife had ever benefited from non-domicile tax status – contrasting himself to both Mr Sunak and Mr Javid.
“I’m very happy, if I proceed to the final two, to publish my tax affairs, if that’s what both candidates do,” said Mr Hunt. “I’m not going to speak for other candidates, but for myself I would have no problem with it.”
It comes as Tory leadership candidates battle to outdo each other over tax cuts. Foreign secretary Liz Truss is poised to enter the race on Monday with a pledge to reverse Mr Sunak’s national insurance rise.
Mr Javid claimed his plans for £39bn worth of tax cuts per year, including a reversal of the national insurance hike, would be fully funded. He promised to set out the details in a “scorecard” in the coming days.
Responding to Mr Javid and Mr Hunt’s plans to cut corporation tax to 15 per cent, Torsten Bell, chief executive of the Resolution Foundation think tank, said: “This is nuts. We’re talking £30bn odd. This is going to be one expensive leadership election.”
