Iain Duncan Smith warns Nadhim Zahawi to clear up tax dispute

Former Conservative leader Sir Iain Duncan Smith has urged Nadhim Zahawi to sort out his tax affairs after the Cabinet minister tried to avoid paying millions of pounds to the exchequer.

Mr Zahawi has agreed to pay HMRC a fine as part of an estimated tax break of over £5million, which appears to have been negotiated when he was Chancellor of the Exchequer and head of the department under ex-PM Liz Truss.

A source told The Guardian that the penalty was the result of a failure to pay capital gains tax due on the sale of more than £20million worth of shares to YouGov, the polling firm Mr Zahawi co-founded.

Shadow Chancellor Rachel Reeves accused Prime Minister Rishi Sunak of being “too weak” to address scandals such as the spat over Mr Zahawi and ex-PM Boris Johnson.

“It’s going to take a Labor government to clean up this mess, to drain the swamp – because frankly it stinks,” she told the BBC.

The 55-year-old confirmed he had paid severance pay and said HMRC officials had concluded he made a “negligent and not intentional” error.

However, Labor has accused the government of not tackling the issue after Mr Zahawi declined to answer further questions.

And Sir Iain told the BBC: “I always think the sooner you can get the actual facts out the better. I would tell him, get that out now and clear things up. I really don’t think this is a man who is cheating.’

Secretary of State James Cleverly, who conducted a series of TV interviews yesterday, denied Mr Zahawi did anything wrong but said he didn’t know the details because he “rested a bit and did some shopping” after a diplomatic trip to the US and to Canada.

Simon Case, the Cabinet Secretary, is faced with calls to oversee an investigation. Lawyers for Mr Zahawi had reportedly previously threatened to sue journalists who wrote about his tax affairs.

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