By Aidan Link: Nadhim Zahawi is a British politician and businessman who is currently serving as the Member of Parliament (MP) for Stratford-on-Avon in Warwickshire, England. He was first elected to the House of Commons in 2010 and has since served in a variety of roles, including as a member of the Treasury Select Committee and as the parliamentary under-secretary of state for children and families. Today, he is Chairman of the Conservative Party and Minister without Portfolio since October 2022.

Right now, Zahawi stands accused of tax avoidance. In addition, the Independent newspaper reported that Zahawi had been the subject of an investigation by the National Crime Agency, the Serious Fraud Office and HM Revenue & Customs.

Ironically, in 2015, Zahawi tweeted: “Labour didn’t deal with tax avoidance for 13 years in government! We have introduced new tax avoidance laws just this month.”

Prior to these latest accusations, Zahawi had been embroiled in a tax controversy involving Her Majesty’s Revenue and Customs (HMRC). The issue revolves around his use of a tax avoidance scheme known as “employee benefit trusts” (EBTs). These trusts are designed to reduce the amount of income tax and national insurance that employees and employers have to pay by allowing them to make contributions to the trust, which can then be used to pay for benefits such as cars and private school fees.

The controversy began in 2016 when it was revealed that Zahawi had used an EBT to pay for private school fees for his children. He initially defended his use of the scheme, arguing that it was legal and that he had done nothing wrong. However, as the scandal continued to unfold, it became clear that many other MPs and public figures had also used EBTs, and that the scheme was widely regarded as a way to avoid paying taxes.

 

Zahawi also apologized for any confusion caused by the situation and said that he would be more careful in the future.

 

In 2017, Zahawi was forced to repay £8,000 to HMRC after an investigation found that he had not paid enough tax on the benefits he received through the EBT. He also apologized for any confusion caused by the situation and said that he would be more careful in the future.

Despite this, the controversy surrounding Zahawi’s use of EBTs has continued to dog him in recent years. In 2019, it was reported that he had been issued a formal notice of investigation by HMRC, who were looking into whether he had failed to declare income from the EBT. He denies any wrongdoing.

Critics have argued that Zahawi’s use of the EBT scheme is hypocritical, given his roles as a government minister and his position as a member of the Conservative Party, which has traditionally been opposed to tax avoidance. They have also pointed out in 2019 that the scheme was particularly controversial at a time when the government was making deep cuts to public services and benefits in order to reduce the national debt.

On the other hand, some have defended Zahawi, arguing that the EBT scheme was legal at the time he used it and that he was simply taking advantage of a legitimate tax loophole. They have also pointed out that many other MPs and public figures have used the scheme, and that it is unfair to single out Zahawi for criticism.

It’s important to note that tax avoidance is not illegal, but it is against the spirit of the law. It is the use of legal means to reduce the amount of tax an individual or company pays, rather than evading taxes. However, many argue that the use of such schemes is morally questionable, especially when it is used by wealthy individuals and large companies who can afford to pay more taxes.