UK Politics

Sajid Javid exploited a tax loophole to benefit from non-dom perks while working in the Treasury as a ministerial aide, The Independent understands.The Conservative leadership hopeful, who on Monday called for greater scrutiny of candidates as he launched his campaign, would say only that he gave up the controversial tax status “before entering public life” and refused to answer further questions on his tax affairs.But according to sources familiar with Mr Javid’s tax planning, while the former health secretary gave up non-dom status in 2009, he preserved some of the tax benefits through an offshore trust until 2012. This step, which is entirely legal, allowed him not to pay UK income tax on some foreign income from investments. From 2011, Mr Javid worked in the Treasury as a ministerial aide to then chancellor George Osborne.While MPs are not allowed to use non-dom on a so-called personal basis, for either income tax or inheritance tax purposes, they can still benefit from it via trusts. This is because trusts are legal entities in their own right, like companies, according to tax experts.Dan Neidle, founder of Tax Policy Associates Ltd, told The Independent: “Non-dom status runs out after 15 years. It’s standard planning for non-doms approaching this limit to put their foreign property into an ‘excluded property trust’. That effectively preserves the benefit of non-dom status forever.”Recommended“To my mind, this is tax avoidance – parliament intended that non-dom status end, and this is a loophole that avoids that result,” he added. Mr Javid has refused to say where his trust was based, but he has said it was not dissolved until 2012, when he had already started his political career and was serving as a PPS – the eyes and ears of the then chancellor.He told reporters on Monday when asked about where he was historically domiciled for tax purposes: “I’m not getting into any more detail about my tax affairs that were to do with a time that I was not in public life. I haven’t been non-domiciled in all my time in public life.” Approached separately by The Independent, Mr Javid’s spokesperson declined to comment on use of non-dom perks while an MP.The tax status of leadership contenders has been in the spotlight after The Independent revealed that HMRC experts were investigating chancellor Nadhim Zahawi’s financial affairs. Earlier this year his predecessor, Rishi Sunak, now the leadership frontrunner, faced questions when it emerged that his wife, Akshata Murty, had used non-dom status.When asked about publishing his tax returns on Sunday morning, Mr Javid said: “I have no issue with transparency like that. I think if I get in the final two, the final two candidates should be quite open about their tax affairs.”Meanwhile, Mr Zahawi has vowed to “answer any questions that HMRC has of me” and publish his accounts annually if he succeeds Boris Johnson at No 10. Mr Sunak is yet to comment on publishing his tax details.Being so-called non-domiciled on a remittance basis allows individuals to only pay UK tax on their income derived in Britain, rather than, like ordinary citizens, their entire worldwide income.Mr Javid said on Sunday he had used non-dom status on his tax returns for about “four or five years” in the 2000s.RecommendedThe then cabinet minister said in a statement about tax affairs in April this year that he dissolved a trust when he became a government minister in 2012 and incurred 50 per cent income tax “on those assets” – the “heaviest possible tax burden”. This would have wiped out any accrued tax benefits, he said.He has also said repeatedly that he had always declared the information required by tax, government and parliamentary authorities. More

Penny Mordaunt and Kemi Badenoch are the favourites to become the new Tory leader among the party faithful, a new poll has indicated.Conservative Home – a news and analysis blog popular with grassroots activists – conducted a survey of its readers and the top candidate to replace Boris Johnson is Ms Mordaunt.The international trade minister, who was previously at the Cabinet Office, got 19.6 per cent, with Kemi Badenoch, the former equalities minister coming a close second with 18.7 per cent.Former chancellor Rishi Sunak, who currently has the most MPs backing him at 37, came in third place on 12.1 per cent.Brexiteer Suella Braverman, who has vowed to withdraw Britain from the European Court of Human Rights (ECHR) if she wins, came in fourth with 11.5 per cent.RecommendedForeign secretary Liz Truss, who launched her bid today with a promise to cut taxes, received 10.93 per cent. She was previously top of the survey when website readers were asked last December.This was closely followed by former soldier Tom Tugendhat, who has never held ministerial office, but is promising a “clean start” for the party.Jeremy Hunt, Nadhim Zahawi and Sajid Javid are the next three and their paltry totals may be some cause for concern as Conservative Home can be a useful barometer for how the party faithful are feeling. Transport secretary Grant Shapps, seen as a good communicator and Boris Johnson loyalist, is just ahead of home secretary Priti Patel who comes bottom of the pile.The previous top of the survey was defence secretary Ben Wallace, who is a popular MP among the Tory grassroots, but on Saturday he decided he wanted to focus on current job of “keeping this great country safe” and not stand to be leader. More

Graham Brady confirms new prime minister will be revealed on 5 SeptemberThe new prime minister will be revealed on 5 September after the Conservative party announced the leadership race rules.Many Tory MPs wanted Boris Johnson forced out more quickly but grassroots Conservatives appeared to fight off an attempt to remove him before then.Candidates in the race to be the next leader will be whittled down to two by several rounds of voting among MPs before the vote goes to the Tory membership.The first vote by MPs will take place on Wednesday, Sir Graham Brady, chair of the 1922 Committee of backbench Tories said after the group met on Monday evening.The list of leadership candidates reached 11 earlier in the day after Sajid Javid, the former health secretary and chancellor, officially launched his campaign. Priti Patel is reportedly planning to enter the race.All besides former chancellor Rishi Sunak have offered tax cuts, drawing opposition from prominent figures in finance including the governor of the Bank of England.RecommendedShow latest update

1657590600Jeremy Hunt pledges 3% defence spend by 2028Jeremy Hunt has pledged to increase defence spending and cancel “unthinkable” planned cuts to the size of the Army in the face of the threat posed by Vladimir Putin’s Russia.The Tory leadership hopeful said he would spend 3 per cent of gross domestic product (GDP), a measure of the size of the economy, on defence by 2028 if he were elected to succeed Boris Johnson.The former foreign secretary would also stop the cuts set out in the 2021 Spending Review in his first Budget, as “now is not the time to be reducing the army by nearly 10,000 personnel”, according to a press release from his leadership campaign.Mr Hunt said: “Whatever other pressures we face, tumbling down the Nato defence spending league table simply cannot be an option for Global Britain.“We’re facing a long-term war of attrition in Europe, so we have to get real about the implications for our defence budget.“The planned cuts to our armed forces are now unthinkable; we must put our money where our mouth is and prove that we understand the first duty of government is keeping people safe”.The pledge would amount to an extra £86 billion cumulatively over the next five years in order to reach the 3% goal, according to the campaign’s estimates.Liam James12 July 2022 02:501657586400Tory candidate Braverman vows to stamp out shirkersConservative leadership hopeful Suella Braverman has vowed to tackle “stubborn” working-age people who “refuse” to get jobs to help cut the cost of government and fund a “radical” plan to slash taxes.The attorney general said: “In so many areas we are spending too much in an inefficient way.”That included looking at the “size of government department budgets”, she said. But she insisted spending could be cut without dramatically reducing public services.She added: “It’s about spending money more smartly and I think we waste too much money.“I think there are too many people in this country, for example, who are of working age, of good health and who are choosing not to work full time and they are taking benefits.“Whilst universal credit did a very good amount of work to stamp out that welfare dependency, we still have a stubborn tail of the population that refuses to enter into economy activity.“I think we have to introduce much more rigour and incentive to get people into work.” More

Tory leadership candidate Nadhim Zahawi has fallen under scrutiny on account of his finances, which have been investigated by both the National Crime Agency and Serious Fraud Office.The new chancellor is believed to be one of the richest politicians in the House of Commons, with an estimated net worth of up to £100 million.Mr Zahawi has been lauded as a modern British success story. Born in Baghdad to a Kurdish family, he and his family were forced to flee Saddam Hussein’s reign during the 1970s and took refuge in the UK. In 2000, he founded the polling company YouGov, before becoming a Tory MP for Stratford-on-Avon in 2010.However, following multiple revelations by The Independent and other newspapers, questions are now being asked over Mr Zahawi’s wealth and how it has been accumulated. Mr Zahawi insists he is “clearly being smeared” and has “always paid my taxes”.RecommendedHere’s what we knowDespite founding YouGov in 2000, alongside Stephan Shakespeare, Mr Zahawi never openly held shares in the company. Instead, according to YouGov’s first Companies House return, Mr Shakespeare held 42.5 per cent of the share capital, Neil Copp held 15 per cent, while 42.5 per cent was held by Balshore Investments Limited – a company incorporated in Gibraltar.Dan Neidle, head of the think tank Tax Policy Associates, said “the central mystery is why Zahawi, one of the key founders of YouGov, held no founding shares in it. The other two founders did. The shares you’d have expected Zahawi to hold were instead issued to a Gibraltar company, Balshore investments Limited. This appears to be owned by an offshore trust controlled by Zahawi’s parents.”A YouGov annual report from 2009 says “Balshore Investments is the family trust of Nadhim Zahawi, an executive director of YouGov plc”. The trust held the shares for at least seven years after Zahawi became an MP in May 2010, earning dividends of hundreds of thousands of pounds.Overall, Balshore owned a stake in YouGov worth more than £20 million but had sold it by 2017-18. Mr Zahawi has said he has never had an interest in Balshore Investments and that neither he, his wife, nor their children are beneficiaries. Instead, a spokesperson said that his father, Hareth Zahawi, who does not live in the UK, owned Balshore.Such an arrangement has stirred suspicions. Mr Neidle believes the “obvious conclusion from the peculiar shareholdings” is that Mr Zahawi engineered for his family’s trust to hold the shares that otherwise would have gone to him, as the founder.“Absent any explanation from Zahawi, I can only conclude this was done to ensure that dividends and gains on those shares were not taxed. If that’s right, it’s a very aggressive structure… This is not normal tax planning.”A spokesperson for Mr Zahawi said: “Any suggestion that Mr Zahawi has engaged in either tax evasion or tax avoidance through the use of offshore structures would be false.”A government source said that at the time Mr Zahawi co-founded YouGov, he was not in a position to contribute start-up capital. His father therefore provided start-up capital and took a shareholding in YouGov through Balshore Investments, the source said.The Observer has reported that Mr Zahawi did not disclose the family trust on the parliamentary register of interests when he became an MP.Beyond YouGov, Mr Zahawi and his wife, Lana Saib, have built an extensive property portfolio, with purchases including a London townhouse, high street properties and an industrial estate.Another Gibraltar company, Berkford Investments Limited, was used to buy Mr Zahawi’s house in 2011. Neither Mr Nadhim nor his wife derived any tax benefit from this loan, which cannot be characterised as an offshore tax structure, the government source said.Zahawi under investigation The Independent reported last week that Mr Zahawi’s finances had been secretly investigated by the National Crime Agency (NCA) in 2020.A senior serving Whitehall figure revealed that a number of individuals had been formally approached by officials from the NCA about the matter.The NCA said it was seeking information about Mr Zahawi’s finances, the source said. The inquiry was codenamed “Operation Catalufa” and is understood to have involved the agency’s International Corruption Unit.Whitehall officials were told the inquiry was top secret and that Mr Zahawi had not been informed about it. The NCA inquiry did not lead to any action against Mr Zahawi. There is no suggestion of wrongdoing by him.The Independent also established that officers from the Serious Fraud Office (SFO) have investigated the chancellor’s financial affairs.The probe was then passed to HM Revenue and Customs, which falls under the control of the Treasury – the department that Mr Zahawi now runs. A senior Whitehall source confirmed that the tax investigation is currently “unresolved”.It has also emerged that Boris Johnson, home secretary Priti Patel and the Cabinet Office were all informed of the investigations.According to The Observer, civil servants in the Cabinet Office’s propriety and ethics team are said to have alerted Boris Johnson to an HMRC “flag” over Mr Zahawi before his appointment. The PM appointed him despite possible concerns over his tax affairs.What has Mr Zahawi said?The chancellor has said he would publish his tax return annually if he becomes Tory leader. “I will publish my accounts annually. That’s the right thing to do,” he said.He also told Sky News he was being “smeared” over his tax affairs.“I was clearly being smeared. I was told that the Serious Fraud Office, the National Crime Agency, HMRC, were looking into me.“I’m not aware of this. I’ve always declared my taxes – I’ve paid my taxes in the UK.”RecommendedHe said he would “look at what the options are in terms of backdating and publishing annually”, but added he would not release his tax returns from over the last decade. “If I am prime minister, I will publish them going forward.“I don’t think being retrospective is right. I was in business before, I came out of that, of course, now I’m in politics.” More

Boris Johnson’s new education minister argued against free school meals and said he did not believe families could not afford food, it has emerged. Brendan Clarke-Smith was appointed a minister at the Department for Education on Friday to fill a vacancy left by a wave of resignations.In October 2020 the Bassetlaw MP used a speech in parliament to complain that free school meals amounted to “nationalising children”. He has also said he believed it was “simply not true” that “people can’t afford to buy food on a regular basis”.Opposition MPs said it was a “complete disgrace” to make Mr Clarke-Smith an education minister given his views.RecommendedThe MP, who was elected to the red wall seat at the 2019 election, joined his colleagues during the pandemic in voting down proposals to extend free school meals provision for the school holidays.During the election campaign Mr Clarke-Smith also blasted food banks and suggested giving away free food to families was counterproductive.“If you keep saying to people that you’re going to give stuff away, then you’re going to have an increase I’m afraid,” he said, adding that it was “simply not true” that “people can’t afford to buy food on a regular basis”.During the October 2020 debate on free school meals in the Commons he rejected suggestions that the government should step in to help children who might go hungry.”We must focus on breaking the cycle where the first reaction is to look to the state,” he said.”It’s a vicious cycle and we need to support families with early intervention and help with things like budgeting and employment. I do not believe in nationalising children.”The former teacher, whose role at the Department for Education is his first ministerial job, was appointed his colleague Andrea Jenkyns.Ms Jenkyns caused a stir on her first day in post after raising her middle finger to a crowd of protesters outside Downing Street. A day later she issued an error-strewn statement in which she branded them a “baying mob” and said “insulting MPs” was “sadly all too common”.Munira Wilson, Liberal Democrat education spokesperson said: “Brendan Clarke Smith is a perfect example of how uncaring this government is by refusing to support vulnerable children. Recommended“The failure of this government to offer help to people in this cost of living crisis risks leaving more and more children going hungry.”Appointing him as an Education Minister is a complete disgrace.” More

Sajid Javid has warned fellow Tories of 1997-style “oblivion” unless they change course as he launched his leadership campaign, saying: “Voters have lost faith in us.”The former health secretary cast himself as the most experienced candidate in the race – having held two of the three big offices of state – and the only one with a detailed economic plan for recovery.Urging the party to pick a leader with “integrity”, Mr Javid pointed to the 1997 landslide defeat and said: “I fear that party was on a trajectory to the same electoral oblivion.“This is a wake up and smell the coffee moment,” he said, adding: “Sleaze, scandal, internal warfare. We’ve seen this movie before, we know how it ends.”But Mr Javid faced difficult questions over his past tax-avoiding non-dom status – refusing to explain three times why he held the status and whether it was in a tax haven.RecommendedHe argued that, as an international banker, he had an “international job and travelled a lot”, claiming he had been “transparent” about his tax affairs, despite the unanswered questions.Mr Javid also attacked the almost-vicious nature of the early campaign, with its “poisonous gossip” and “attack memos”, saying: “This isn’t House of Cards or Game of Thrones.”And, asked about staying in Mr Johnson’s cabinet for so long, he replied: “Perhaps I should have left earlier. But I didn’t see anyone else leave any earlier than me,” In fact, the party chair Oliver Dowden quit before him.He appeared to acknowledge his lack of charisma, a frequent criticism, saying: “No one is the full package. I know I’m not.”But he pointed to the return of a strong team of people, adding: “If we can get back to seeing this job as the first among equals, we can transition from a team of rivals to an unrivalled team.”Mr Javid was also questioned over his U-turn in arguing for the National Insurance hike to fund better health and social care – only to call for it to be scrapped, now he is running for leader.He said the decision was “right and fair” when it was announced, but said: “The circumstances have changed. When the circumstances change in terms of amount of money coming into treasury it is right to respond.”On his tax affairs, Mr Javid said: “I lived in the [United] States, I lived in the UK, I lived in Singapore, I was tax resident in different countries, as part of my job. It had an impact on my statuses. That’s not unusual.“I had a tax adviser, accountants that would help me with my international taxes, I moved around a lot.Recommended“And the test for me was to make sure that, whatever you do, when it comes to your taxes, your personal tax affairs, that is always correct, proper, within all the rules, and that was met at all times.“So I am perfectly happy about that. And I am certain that I’ve never had an issue with HMRC. I’ve never had a tax investigation. I’ve always been transparent, fully transparent, with the tax authorities.” More

The race to succeed Boris Johnson has begun in earnest with several of the candidates pledging significant tax cuts costing billions of pounds if they become the next Conservative leader.The pledges have led to a former Tory chancellor, Lord Lamont, warning of the danger of the leadership race descending “into a sort of Dutch auction of tax cuts which are not necessarily affordable”.But the contenders’ own financial affairs are also coming under increasing scrutiny, leading to some suggesting they will publish their tax returns if they proceed to the final two next week. Nadhim ZahawiHitting out at what he described as “smears” over his tax affairs afterThe Independent reported his finances were being investigated by HMRC, the newly appointed chancellor has vowed to publish his tax returns annually if he makes the final two.Recommended“If I am prime minister, I will publish them going forward,” he told Sky News, but suggested he would not publish those from previous years.“I don’t think being retrospective is right. I was in business before, I came out of that, of course, now I’m in politics.”Sajid JavidThe former health secretary, who has previously admitted holding non dom tax status for six years before he entered politics, suggested on BBC’s Sunday Morning programme that he would also publish his tax returns. More

Conservative Party leadership contenders have been urged to ignore the “siren voices” pushing them to ditch the UK government’s plan to achieve net zero carbon emissions by 2050.A group of net zero sceptics on the Tory back benches are hoping to move Boris Johnson’s would-be successors away from green policies, as climate change shapes up to be a major battle in the contest to choose the next prime minister.Senior Tory MP Steve Baker – founder of the Net Zero Scrutiny Group of backbenchers – has suggested that he would push for the next PM to dismantle the government’s climate agenda.Some in the party fear top contenders such as Nadhim Zahawi and Liz Truss could be pressured into prioritising tax cuts over investment in renewable energy, as well as committing to an expansion of oil and gas production.Tory peer Zac Goldsmith, who has attacked Rishi Sunak’s environmental record, told The Independent it would be better to have a Labour government than a leader who “deprioritises” action on net zero.Lord Goldsmith added: “It would be a catastrophic error for Conservatives to select a candidate who deprioritises these issues, but if they do, then we can only hope voters replace the party at the [next] available election.”RecommendedChris Skidmore, a senior backbencher who chairs the Tories’ rival Net Zero Support Group, has vowed to push candidates to uphold Britain’s climate commitments.“We can’t put net zero at risk,” the former energy minister told The Independent. “I devoutly believe net zero is a vote winner. If we go soft on net zero, then a candidate has to know they will struggle to win a general election.”Warning contenders to ignore the “siren voices” of the Net Zero Scrutiny Group, Mr Skidmore pointed to recent polling which shows that ditching net zero could cost the Tories 1.3 million votes.“I’m absolutely determined to make sure net zero policies are put forward,” said the MP, who signed the commitment to achieving zero carbon emissions by 2050 into law when he was energy minister in 2019.Mr Skidmore added: “It’s a policy that unites the red wall in the north and blue-wall seats in the south, because there are plans to deliver massive investment in renewable energy in red-wall seats.” More