Nadhim Zahawi transparent over tax affairs - Raab

Nadhim Zahawi, who attends cabinet, was made chancellor in the closing days of Boris Johnson's government

Nadhim Zahawi has been "transparent" about his tax affairs, the deputy prime minister says, after reports the Tory Party chairman paid a penalty to HMRC.

Mr Zahawi is under pressure over claims he tried to avoid tax and has now had to pay it back as part of a multi-million pound settlement.

Dominic Raab told the BBC "all the tax owed has been paid" and it was for Mr Zahawi to answer any further questions.

Labour said the former chancellor should be sacked.

The BBC has approached Mr Zahawi for comment on the allegations.

• Sunak quizzed about Zahawi's tax allegations

• Labour calls for Zahawi to be sacked over tax claims

According to the Guardian, Mr Zahawi has had to pay back tax he owed with a 30% penalty and the total amounts to £4.8m.

The BBC has been unable to verify that figure, but when the Guardian asked repeatedly about the penalty, Mr Zahawi's spokesperson did not deny one had been paid.

When pressed on the total amount, which was thought to include the alleged penalty, the spokesperson said: "Nadhim Zahawi does not recognise this amount… as he has previously stated, his taxes are properly declared and paid in the UK."

Penalties can be applied if tax is not paid in the correct amount at the right time.

Speaking to BBC Radio 4's Today programme, Deputy Prime Minister Mr Raab said Mr Zahawi "has been transparent about the fact that all of the tax has been paid and he doesn't have any tax outstanding".

"He has been clear that all of his tax owed to HMRC are up to date and paid in full," Mr Raab added.

"If he needs to answer any further questions I'm sure he'll do so."

Asked whether Mr Zahawi - who attends cabinet - should address the issue in Parliament, Mr Raab said: "That's a matter for him."

Labour's deputy leader Angela Rayner told BBC Breakfast: "The position of the man who was until recently in charge of the UK's tax system, and who this prime minister appointed Conservative Party Chair, is now untenable.

"It's time for Rishi Sunak to put his money where his mouth is and dismiss Nadhim Zahawi from his cabinet."

She added: "The fact that Nadhim hasn't been out on the airwaves explaining himself to me adds insult to injury."

Shadow Chancellor Rachel Reeves echoed Ms Rayners calls for Mr Zahawi to go, saying: "If the prime minister wants to stick by his commitment for integrity, honesty and professionalism, he should do the right thing and sack Nadhim Zahawi."

Liberal Democrat deputy leader Daisy Cooper said the allegations were "becoming impossible" for the prime minister to ignore, and the public deserved to know the substance behind them.

The company at the centre of the row is Balshore Investments and it is registered offshore in Gibraltar.

Mr Zahawi has faced questions over whether he used Balshore to hold shares in YouGov, the polling company he co-founded in 2000 - something he has always denied.

Questions about Mr Zahawi's tax affairs have added to a series of challenges this week for the prime minister, who was fined by police for not wearing a seatbelt in the back of a moving car.