Nadhim Zahawi has not made an βinnocent errorβ in his tax affairs, the head of HM Revenue and Customs suggested, raising fresh questions about the cabinet ministerβs Β£1m fine.
The Tory chair claimed he had βacted properlyβ with his tax affairs and that officials had judged his error to have been βcareless and not deliberateβ.
βIf you take reasonable care but nevertheless make a mistake, whilst you will be liable for the tax and for interest β¦ you would not be liable for a penalty,β Mr Harra told the public accounts select committee on Thursday.
βBut if your error was as a result of carelessness then legislation says a penalty can apply in those circumstances,β he added, stressing that he was not talking about Mr Zahawiβs specific case.
Labourβs deputy leader Angela Rayner said: βNadhim Zahawiβs excuses are continuing to unravel.β
The prime minister is said to be βlividβ at Mr Zahawi over the controversy, and a growing number of Tory MPs and peers are keen for Mr Zahawi to resign now β rather than wait for the outcome of the No 10 ethics investigation.
Saying his position was βuntenableβ without a clear explanation, Mr Mills added: βHMRC thought he did something they really didnβt like. Penalties are serious, though there are degrees of seriousness. It comes down to him to explain it and clarify all this.β
Ex-Tory chancellor Philip Hammond also criticised Mr Zahawi, saying he would not have accepted the job of chancellor in the summer if he had been involved in a βliveβ HMRC investigation β first revealed by The Independent in July.
He told LBC: βI think somebody needs to take Rishi Sunak to one side and say, look, youβre trying to protect him, we sort of understand that. But be in no doubt that you are taking on a huge amount of damage with every minute that you keep him in that post.β
Mr Zahawi has given HMRC his approval to speak to the investigation into his tax affairs, a source close to the Tory chair later said.
Trade minister Andrew Bowie β a close Sunak ally β had told the BBC that if Mr Zahawi is found to have βfallen foulβ by the ethics adviser, the PM will βof course sack himβ. A No 10 spokesperson said on Thursday that Mr Bowie had been βgiving his opinionβ rather than speaking for the PM.
Asked about the HMRC chiefβs remarks, Mr Sunak said he would βawait the findingsβ of the ethics probe.
Speaking at Chequers where he has been holding a cabinet awayday β where he was joined by the Mr Zahawi β Mr Sunak again insisted that the senior Toryβs tax affairs were not raised with him when he appointed him in October.
However, one source told The Guardian that No 10 was informed of Mr Zahawiβs penalty and tax settlement with HMRC prior to his appointment as Tory chair. Downing Street denied that this was the case.
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