Former Chancellor Nadhim Zahawi has revealed he paid nearly £5 million to HMRC to settle outstanding tax bills and fines for carelessness. His figures reflect our analysis concerning his offshore tax and trust published in January last year.

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Speaking on the BBC's 'Sunday With Laura Kuenssberg' programme, it was the first time he confirmed everyone else's calculations, saying he regretted not explaining his settlement with HMRC two years ago when he was Chancellor of the Exchequer. 

Despite paying no tax on over £20 million, he said that HMRC had found it was a non-deliberate but Careless mistake.

His on-screen confession came the day before he announced his new role as Chairman of the Very Group, one of the UK's biggest online retailers and owned by debt-troubled Barclay Brothers and days after he announced he would stand down as an MP at the next election.

The 'Offshore tax penalties: case study' outlined the case and estimated that including fines from HMRC, Mr Zahawi would owe £4.99 million. 

  • Mr Zahawi was a Non-UK domiciled but UK resident individual. His family had an Offshore trust, Balshore Investments Ltd in Gibraltar for the benefit of himself and his family.
  • Mr Zahawi arranged for Shares issued by a start-up company, in this case, the polling firm YouGov, to be issued to the trust instead of him.
  • The shares were later sold for about £20 million.
  • Mr Zahawi and his wife then took interest-free loans from the trust of £10 million each. Again no UK tax was paid.

Mr Zahawi said HMRC agreed that he was not the beneficiary of an offshore structure but somehow not enough shares were 'allocated' to his name from YouGov. He generously added, "I accepted it [HMRC's decision] by the way because I was Chancellor of the Exchequer and even if I wanted to push back on this I think it would have been a total abuse of power if I had done."

Mr Zahawi was sacked from the chancellorship last year following an enquiry by the prime minister's ethics adviser into the affair. 

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External link

BBC report and video: Nadhim Zahawi confirms nearly £5m paid for tax error