Rishi Sunak appears to distance himself from embattled Nadhim Zahawi amid tax row

Rishi Sunak appeared to distance himself from Nadhim Zahawi as the embattled Tory chairman gave HMRC approval to speak to the investigation into his tax affairs.

It comes after the head of HMRC said there are ‘no penalties for innocent errors’ in tax returns following the revelation that Mr Zahawi was made to repay £4.8 million in tax, including a 30 per cent penalty.

The Prime Minister initially backed Mr Zahawi to stay on in his role, but has now appointed an independent advisor to look into the affair and said he will not ‘pre-judge the outcome of the investigation’.

The Conservative Party chairman has insisted he has no intention of quitting and said he welcomed the prospect of an investigation by the independent adviser.

Conservative Party chairman Nadhim Zahawi is facing increasing pressure to go following revelations over his tax affairs

Mr Zahawi was absent from Prime Minister’s Questions yesterday, where Mr Sunak distanced himself from the affair ahead the results of a standards investigation due to report back within weeks

Rishi Sunak is said to be ‘livid’ at Mr Zahawi for handing Labour a ‘gift’ as the Tories fall well behind in the polls, on just 21 per cent compared to Labour’s 50 per cent.  

Many Conservative MPs believe the party chair will have to be sacked, but Mr Zahawi has insisted he behaved properly in his tax affairs.

He has now given the head of HMRC Jim Harra permission to look into his taxes after he said his multi-million pound fine was not the result of an ‘innocent mistake’, The Times reported.

Facing questions from the Public Accounts Committee today, Mr Harra was careful to point out that he was not discussing anyone in particular. 

Mr Harra told the committee: ‘There are no penalties for innocent errors in your tax affairs. So if you take reasonable care, but nevertheless make a mistake, whilst you will be liable for the tax and for interest if it’s paid late, you would not be liable for a penalty.

‘But if your error was as a result of carelessness, then legislation says that a penalty could apply in those circumstances.’

The cabinet travelled to Chequers to discuss its strategy for the next election, with Mr Zahawi still part of the group despite widespread calls for him to go. 

He was absent from Prime Minister’s Questions in Parliament yesterday as Mr Sunak distanced himself from the affair. 

Speaking after the Cabinet away day, the Prime Minister said: ‘Because new information came to light over the past week, that’s why I decided to ask the independent adviser to fully investigate this matter. 

HMRC boss Jim Harra told MPs that there were no tax penalties for ‘innocent’ mistakes

A new poll by People Polling today gives Labour a 29-point lead with voters, up five points in a week. 

The cabinet travelled to the Prime Minister’s estate in Chequers today amid the growing row

A protester holds up a placard in Westminster following the controversy over Mr Zahawi’s taxes

‘When I appointed Nadhim Zahawi to his current job, no issues were raised with me about that appointment.’

He added: ‘I’m not going to pre-judge the outcome of the investigation, it’s important that the independent adviser is able to do his work. 

‘That’s what he’s currently doing, that’s what I’ve asked him to do and I’ll await the findings of that investigation.’