The Conservative Party chairman’s tax affairs have been under scrutiny after it was revealed he settled a multimillion-pound tax dispute with HMRC while he was chancellor.
“Hi, this is Dan Neidle, UK Head of Tax at Clifford Chance. I now have the answers to your ten tax questions.”The Lawyer
If you don’t spend time perusing videos about tax on Youtube, you might not have heard of Dan Neidle.
“Question 1: How many taxes are there in England? I think the answer is 34? It looks something like this: income tax, national insurance corporation tax…”The Lawyer
He’s a tax lawyer with years of experience at one of the world’s biggest law firms.
And even though he stepped back from the corporate world a few years ago to spend more time with his family, he hasn’t exactly led a quiet life.
He now runs Tax Policy Associates, which provides advice to experts and politicians about tax policy.
But he also began asking questions about one politician’s tax affairs in particular.
“A Tory party chair facing further questions over his financial affairs after his emerged he settled a dispute with tax authorities while he was Chancellor.”Sky News
Thanks to Dan Neidle it was revealed that Nadhim Zahawi paid £5 million to HM Revenue and Customs, which included a penalty.
“Will you resign as Party Chair Mr Zahawi? Are your tax affairs a distraction for the party Mr Zahawi?”Daily Mail
Labour leader Keir Starmer has called for his resignation, and the pressure is mounting.
But these headlines haven’t come out of nowhere; Dan Neidle has been investigating Nadhim Zahawi’s taxes for months.
So how did we get here?
“So back in July, there was a report in some of the press that the NCO, the SFO and HMRC had investigated his tax. He denied it, but then you wouldn’t necessarily know if you’re being investigated. So I started looking and I saw something very odd…”Sky News
Dan Neidle was interested in YouGov, which is the market research firm that Nadhim Zahawi co-founded before he became an MP.
And he spotted something strange. 40 per cent of the company’s shares were held in a Gibraltar–based trust, controlled by Nadhim Zahawi’s parents.
Nadhim Zahawi himself took no shares in YouGov. He said that the shares went to his parents in recognition of the advice and money that his father had provided to help him start the company.
To some, this was already suspicious. Gibraltar is widely regarded as a tax haven. And some early YouGov employees told The Times newspaper they had no recollection of Nadhim Zahawi’s father being involved in the company when he started it.
But things got more questionable when the Zahawi’s sold their stake in the company for £27 million in 2018.
If Nadhim Zahawi was the true beneficiary of that transaction, he would have had to pay tax on it.
Dan Neidle figured all this out back in July.
“It looked like he had not paid about £3.7 million in tax. He denied that. Not only did he deny it, he threatened to sue me and other newspapers looking at it.”Sky News
Everything went quiet for months after that. Until this news emerged.
“The BBC’s Chris Mason understands that, while Chancellor, he paid around £5 million to settle a tax dispute, which included paying a penalty. The Guardian reports that 30% of the overall amount – £1 million – was the penalty in question.”BBC
Nadhim Zahawi has not broken the law. HMRC accepted that this was a “non-deliberate error” relating to YouGov.
So what does it matter?
As Dan Neidle told Sky’s Kay Burley, the whole saga does raise serious questions.
Kay Burley: “I suppose a lot of people watching this morning would say surely, you know, he’s putting his hands up, he made a mistake, he’s paid the money he needed to. That’s it.”Sky News
Dan Neidle: “Well, we all make mistakes. I mean, I lost a pen yesterday. I have no idea where it was. I felt ridiculous. I was using it. A mistake where you don’t declare £27 million? I mean if we accept everything he says, and that wasn’t intentional, that’s an amazing mistake to make.”
It’s also not clear whether successive prime ministers were told about the HMRC investigation into Nadhim Zahawi when he was appointed Chancellor by Liz Truss, or when he was in the running to be re-appointed by Rishi Sunak.
He wasn’t reappointed, but he was made Tory Party chair. A job he remains in.
Rishi Sunak’s spokesperson says he has full confidence in Nadhim Zahawi.
But Dan Neidle questions whether someone who makes those kinds of errors can really hold such a senior position.
And, to him, this isn’t just about the taxes. It’s about the fact that he uncovered this six months ago. And he was silenced.
This episode was written and mixed by Patricia Clarke.