Sunak orders investigation into Zahawi tax row

1. Conservative Party Chairman Nadhim Zahawi is facing calls to resign following a row over his tax affairs
2. Prime Minister Rishi Sunak has asked his independent ethics adviser to investigate, saying there are "questions that need answering"
3. Labour leader Sir Keir Starmer says Zahawi's position is "untenable" and he should be sacked today
4. The BBC has confirmed that Zahawi paid a penalty to HMRC while he was chancellor, over unpaid tax, with the total settlement understood to be worth around £5m
5. The inquiry will look into whether Zahawi breached the ministerial code - he has welcomed it and says he looks forward to "explaining the facts"
6. Sunak is also facing a separate controversy over the appointment of BBC chairman Richard Sharp and his links with then PM Boris Johnson
7. The process of hiring Sharp is to be reviewed by the Commissioner of Public Appointments following claims he helped Johnson secure a loan

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For more coverage on the investigation into Nadhim Zahawi tax row - click here.

And you can find out more about the review into BBC chairman Richard Sharp's hiring here.

Updates were brought to you today by Alexandra Fouché, Malu Cursino, Jack Burgess, Thomas Mackintosh, James FitzGerald, Emily McGarvey, Paul Seddon, Krystyna Gajda and Chris Giles.

Teatime round-up

Here are the latest developments in a row over the tax affairs of Nadhim Zahawi - after it emerged that he paid HMRC a penalty while he was chancellor, over previously unpaid tax.

We've also been covering a separate controversy over the appointment of Richard Sharp as chairman of the BBC.

• In the Commons, Cabinet Office Minister Jeremy Quin said Prime Minister Rishi Sunak would have followed the “usual process” when he made Zahawi the Tory chairman last year
• He was responding to an urgent question from Labour about ministerial vetting, after it was announced earlier that the PM’s ethics adviser would investigate Zahawi’s case
• Quin also defended the process by which Richard Sharp was appointed BBC chairman under Boris Johnson, following claims Sharp helped Johnson to secure a loan
• It has also been announced this afternoon that William Shawcross, the commissioner of public appointments, will look into how Sharp was appointed
• Sharp denies any conflicts of interest, but said that he welcomes "any review that will clarify my role in this matter"

Why the row over Nadhim Zahawi will trundle on

Chris Mason

Political editor

What could have happened today is Nadhim Zahawi deciding to resign. Or the prime minister deciding to sack him. But neither did.

Nor has Zahawi appeared in front of the cameras to answer the filing cabinet full of questions he faces.

Which means this row will trundle on, while the prime minister's independent adviser on ministers’ interests pokes around the affair.

The PM's public outlook on the conduct of his party chairman has pointedly shifted in just days; as Downing Street acknowledged it didn't know until this weekend Nadhim Zahawi had been charged a penalty by HMRC.

But Rishi Sunak has chosen to define his commitment to integrity as seeking out the facts - to "do things professionally" as he put it - rather than get rid of Zahawi now.

Westminster inquiries can act as a fire blanket on controversy, smothering the intensity of the political flames by allowing their subject to swerve questions for as long as they take.

But for No 10 - and Nadhim Zahawi - this is a problem deferred, at best; not resolved.

WATCH: 'It's all a bit banana republic'

'It's all a bit banana republic' says SNP

Earlier, SNP MP John Nicolson attacked the government over the appointment of Richard Sharp as BBC chairman.

Nicolson cited Sharp's links to Boris Johnson and asked: "It's all a bit banana republic, is it not?"

Both Sharp and Johnson deny there was any conflict of interest in their dealings.

Sharp welcomes watchdog review into appointment

BBC

BBC chairman Richard Sharp has responded to the news that his appointment is to be investigated by the Commissioner of Public Appointments William Shawcross.

He says: "I welcome any review that will clarify my role in this matter."

It's been reported that Sharp helped the then-prime minister to secure a loan shortly before Johnson recommended him for his BBC job. Sharp denies there was any conflict of interest through his dealings with Boris Johnson.

He adds that he expects this will all be "confirmed by due process".

Government message is clear - wait and hear the facts

David Wallace Lockhart

BBC political correspondent

House of Commons

Jeremy Quin was sent out to deal with Labour's urgent question

Labour’s Angela Rayner has insisted there’s no need for an investigation into whether Nadhim Zahawi broke the ministerial code.

She believes the prime minister doesn’t need an advisor to tell him the Tory Party chairman’s conduct has been “unacceptable”.

It’s often a junior government minister who’s put forward to deal with awkward urgent questions like the one we heard in the Commons a short time ago.

Step forward Jeremy Quin. His message was simple: “Wait and hear the facts”.

Zahawi is confident that he’ll be vindicated in any inquiry.

Rishi Sunak has bought some time on this issue, because until his ethics advisor reports back any decisions about Zahawi’s future are on the back-burner.

But, that urgent question showed us we shouldn’t expect opposition politicians to sit quietly and wait for the investigation to conclude.

They see a government minister facing pressure, and they want to turn up the heat.

Timeline: Zahawi's taxes dominate headlines for months

Reuters

Nadhim Zahawi has accepted he had to pay a one-off sum to HMRC and called it a “careless error” – but he only made this admission on Saturday.

Let’s have a look back at how this unfolded:

• 6 July – The day after Zahawi is made chancellor, The Independent reports that he had been the subject of an investigation by the National Crime Agency and HMRC. Zahawi tells the paper he has no knowledge of this, and that he had “paid all taxes”
• 11 July – While taking part in the summer edition of the Tory Party leadership contest, Zahawi said allegations he was under investigation were an attempt to smear him
• 13 July – He was eliminated from the contest which Liz Truss went on to win
• 25 Oct – Zahawi is appointed Tory Party chairman after Rishi Sunak replaced Liz Truss as prime minister
• 15 Jan – The Sun claims Zahawi paid up millions in tax and settled a dispute with HMRC – he declines whether to say the story is correct
• 18 Jan – Rishi Sunak comes under pressure in Parliament over Zahawi’s tax affairs and backs his colleague, saying he has “already addressed this matter in full”
• 20 Jan – The Guardian reports Zahawi agreed to pay a penalty to HMRC and when asked repeatedly about the penalty, Zahawi’s spokesperson does not deny one had been paid. They insist Zahawi’s taxes are properly declared and paid in the UK
• 21 Jan – Labour calls for an investigation with deputy leader Angela Rayner saying Zahawi’s position is “untenable”. Later that day, Zahawi issues a statement saying an error in his tax affairs was “careless and not deliberate”

The exact timing as to when the settlement was reached with HMRC remains unclear, as does the amount paid. The BBC understands it to be in the region of £5m.

Why aren't financial interests of all ministers in public domain?

Sir Chris Bryant asks why the financial interests of all ministers are not in the public domain.

He says the list on the website is currently 243 days old and is not even an accurate list of ministers.

"Surely the public ought to know within a week of being appointed what all their financial interests are - why can't we have that and why do we have to wait another three months to find out?" he asks.

Jeremy Quin says he can't give an exact date because the independent adviser has work to do before publishing his report but says an updated list on ministers financial interests will be published before May.

Sunak will do 'diddly squat' - Labour

Labour's Tanmanjeet Singh Dhesi says the prime minister will do "diddly squat", labelling Rishi Sunak as a weak leader.

He calls attention to Zahawi's role as chancellor while this tax business was being settled.

Quin issues another defence of the government and says the inquiry is happening adding that the "independent advisor will establish the facts".

Faith in politics, Parliament and BBC at 'all-time low'

Labour's Andy McDonald says that faith in politics, Parliament and the BBC is at an "all-time low," and the "one common denominator" is the Conservatives being in power.

Jeremy Quin rejects this, saying it is "unfortunate" to start making "allegations about the whole of the BBC" about a matter where the facts are disputed.

'Is this government only for the super-rich?'

Labour MP Richard Burgon says: "Isn't this whole affair yet another point of proof that it's far more likely you're going to have conflicts of interest when you have a government of the super-rich for the super-rich?

"The prime minister stood on the steps of 10 Downing Street and promised the nation he would act with integrity, yet here we are again," Burgon says.

Jeremy Quin responds by saying integrity, accountability and professionalism underpin this government, and part of that is making sure you have the facts.

"That is what we are undertaking to do through the offices of the independent adviser."

Precious little evidence of accountability - Lib Dems

Liberal Democrat MP Christine Jardine recalls Rishi Sunak's first speech outside Downing Street as she asks her question.

She says there has been "previous little evidence" of integrity and accountability.

The Edinburgh West MP asks if this is doing further damage to politicians in general?

Cabinet Office Minister Jermyn Quin says that decisions should be based on all the facts, but admits these should be established swiftly.

BBC Chairman's appointment was 'incredibly robust' - Quin

The SNP's John Nicolson turns to the controversy surrounding Richard Sharp's appointment as BBC chairman during the premiership of Boris Johnson, calling it "all a bit banana republic”.

Cabinet Office Minister Jeremy Quin rejects this, adding the process for Sharp's appointment was "incredibly robust".

He also says the recently-announced review of the appointment by William Shawcross, the commissioner of public appointments, will “double check” it was consistent with the standards expected.

Independent adviser's findings 'published in due course', Quin says

Jeremy Quin says "I'm absolutely confident the usual process would've been followed in the appointment process by this prime minister".

He says the independent adviser's findings will be "published in due course"​.

"Integrity and accountability are critical as is professionalism and this government will wait and hear the facts before taking decisions based upon those facts."

Carousel of ministers and same old excuses - Rayner

Rayner is back on her feet and says there is a "carousel of ministers but it is the same old excuses".

She questions the standards in the entire government and asks when exactly did the prime minister know about Zahawi's settlement and when red flags were raised by the vetting process.

"Why does the prime minister need an adviser to tell him this conduct is unethical?" she asks.

She continues: "If the prime minister came clean about what he knew and when, would we need yet another investigation?"

Ministerial appointments a matter solely for the PM

Cabinet Office minister Jeremy Quin says ministerial appointments are a matter solely for the prime minister as the head of the government.

It's his role to recommend individuals for appointments and he may receive advice from the civil service on matters of propriety and potential conflicts of interest.

He says the civil service has no role in approving or vetting appointments as they are a matter for the PM.

"It is the responsibility of all ministers to ensure that no conflict arises or could be reasonably received to arise between their role and their private interests, financial or otherwise.

Rayner asks about vetting ministerial appointments

Rayner starts her urgent question by asking Paymaster General and Minister for the Cabinet Office Jeremy Quin if he will make a statement on managing conflicts of interests and vetting ministerial appointments.

Angela Rayner starts her urgent question

Deputy Labour leader Angela Rayner is on her feet and at the dispatch box.

Stay with us as we bring you the latest.

Government likely to insist all questions about Zahawi wait till inquiry is over

David Wallace Lockhart

BBC political correspondent

Labour have an urgent question in the Commons shortly that will allow them to press the government on Nadhim Zahawi and his taxes.

Opposition parties have been calling for the prime minister to sack the Conservative Party chairman over the revelation that he paid a penalty over previously unpaid tax while serving as chancellor.

But the prime minister's announcement that he wants his ethics advisor to investigate whether there were any breaches of the ministerial code actually gives Zahawi some breathing space.

Though the prime minister says there are "questions that need answering", Nadhim Zahawi will stay in post while he's being investigated.

Any final decision from Rishi Sunak has been delayed.

The Conservative Party chairman has said he's confident he's "acted properly throughout".

Investigations can sometimes take the immediate pressure off – they kick a decision into the long grass.

When this issue makes its way to the floor of the Commons shortly, we can expect the government minister who's responding to insist that all questions should wait until the inquiry is done.

An answer that works for now, but won’t work forever.

BreakingProcess to appoint BBC chairman to be reviewed

It's just been announced that the Commissioner of Public Appointments William Shawcross will be reviewing the competition which led to Richard Sharp being appointed as BBC chairman.

The review will take place to ensure "the process was run in compliance with the government's governance code for public appointments".

Read more on this breaking story here.