On Wednesday, Nadhim Zahawi said that his founder shares in YouGov ended up with a Gibraltar company because it had provided capital. I went through all the filings and concluded that either I was missing something, or Zahawi was lying.
Turns out Zahawi was lying. An update:
Turns out Zahawi was lying. An update:
https://twitter.com/DanNeidle/status/1547167726963236864
After I posted my analysis, Zahawi started telling a different story...
... a surprising undermining of Zahawi's own success in establishing YouGov, and not how entrepreneurs (or fathers) usually behave.
... a surprising undermining of Zahawi's own success in establishing YouGov, and not how entrepreneurs (or fathers) usually behave.
@billykenber then did the hard yards & spoke to people who were at YouGov at the time. The idea Zahawi's father was heavily involved was news to them
YouGov then themselves denied Zahawi's story.
(Why would they make a public statement? Possibly because the legal consequences of having had a "shadow director" are often undesirable)
(Why would they make a public statement? Possibly because the legal consequences of having had a "shadow director" are often undesirable)
1. What does this mean?
Zahawi now has no explanation of why a Gibraltar company, held by an offshore trust owned by his parents, came to hold *his* founder's stake in YouGov, eventually worth over £27m.
Zahawi now has no explanation of why a Gibraltar company, held by an offshore trust owned by his parents, came to hold *his* founder's stake in YouGov, eventually worth over £27m.
The only explanation left is the obvious one: tax avoidance. If Zahawi held the shares in the normal way, he'd have been taxed on dividends and gains (at least £3.7m of tax)...
... instead, the dividends and gains were untaxed in Gibraltar, and then (I expect) gifted and lent at various times back to Zahawi. We have evidence of at least one gift, and a related Gibraltar company made multiple loans.
2. What are the consequences?
I expect HMRC will open an enquiry (if they haven't already) and look to tax the Gibraltar company and/or Zahawi himself the big £20m profit it made selling all its YouGov shares in 2017/18.
(Trickier but not impossible to pursue earlier periods)
I expect HMRC will open an enquiry (if they haven't already) and look to tax the Gibraltar company and/or Zahawi himself the big £20m profit it made selling all its YouGov shares in 2017/18.
(Trickier but not impossible to pursue earlier periods)
If, back in 2000, Zahawi gave HMRC the same false explanations he gave us last week, then this would be criminal tax evasion, not avoidance. But I expect he actually just told HMRC nothing.
It will still be tax evasion if Zahawi or others acted dishonestly; that may or may not be the case, but it would be hard to prove.
However there are multiple ways HMRC can attack the arrangement under anti-avoidance principles, trust principles, specific anti-avoidance rules etc. Zahawi's conflicting and false denials will make any defence difficult.
it seems very likely this was "deliberate concealment" and attracts a penalty of up to 100%. i.e. you pay twice what the tax should have been. gov.uk/hmrc-internal-…
It's strongly in Zahawi's interest for this not to become public, so likely he will reach a settlement as soon as possible and pay up quietly (tax plus interest plus penalties). We will never know.
It cannot be right that the Chancellor of the Exchequer lies about his past tax affairs.
It is an impossible conflict to have a Chancellor who is likely to be subject to an HMRC enquiry and accusations of deliberate concealment.
It is an impossible conflict to have a Chancellor who is likely to be subject to an HMRC enquiry and accusations of deliberate concealment.
The Times article is here: thetimes.co.uk/article/nadhim…
My original report is here: taxpolicy.org.uk/2022/07/10/zah… and my analysis of Zahawi's previous defence is here: taxpolicy.org.uk/2022/07/13/zah…
Both updated
Both updated
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