On the search for integrity and accountability

By Drew Aspinwall

With Rishi Sunak ordering an investigation into Nadhim Zahawi’s tax affairs yesterday, the scrutiny is not only on whether Zahawi was indeed acting carelessly and not deliberately in his dealings with HMRC, but the affair also puts Sunak’s authority as Prime Minister firmly into the spotlight. 

The suggestion that the former Chancellor had not paid tax that was due understandably sticks in the craw of taxpayers, particularly those who have more complex tax or company return regimes to stringently follow, and especially in the current economic climate. 

“Zahawi-gate” is a gift-wrapped new year’s present for Sir Keir Starmer, a political open-goal for the Labour leader who said simply that "everybody knows it is wrong", with the political optics of Zahawi reaching a settlement with a body he had oversight of as Chancellor speak for themselves.  

Whilst Sunak can distance himself slightly from the affair due to not being PM at the time of the penalty payment in question, this only buys him so much time; interest in the story is naturally intense and while every ‘normal’ household is counting every penny, Zahawi’s tax affairs will be used as proof that we are not ‘all in it together’ and the ability to find circa £5m (reported a sum that included the penalty) emphasises this divide. 

With tax in the spotlight, a recent report from the All-Party Parliamentary Group for Anti-Corruption & Responsible Tax and thinktank TaxWatch published last year argued that tax avoidance could and should be prosecuted as tax fraud and the distinction between legal tax avoidance and illegal evasion is 'a myth’.  

That report went on to say that HMRC 'cannot keep up with better-resourced lawyers and accountants concocting potentially fraudulent avoidance schemes for their clients, and so many succeed without so much as a second glance'. 

Just like the self-assessment return deadline of 31 January, then, the clock is ticking on both another test of Sunak’s commitment to higher standards of accountability and integrity and whether Zahawi can save his own political future.