From an Iraqi-refugee who spoke no English to a multi-millionaire businessman and cabinet minister, Nadhim Zahawi’s story is one of the most compelling in Westminster.
But questions about his financial affairs are now front and centre, having first gained prominence during the Stratford-on-Avon MP’s short-lived campaign to become prime minister last summer.
The allegations centre on his links to a Gibraltar-based trust ‘Balshore Investments Limited’, of which his father Hareth Zahawi is a director.
When Nadhim Zahawi co-founded the polling firm YouGov in May 2000, the trust was allocated shares in the company equalling the number given to the other co-founder Stephan Shakespeare.
Asked about this by Kay Burley last year, the then chancellor said neither he nor his wife benefit from the Gibraltar trust and denied it was used to avoid tax, saying it was simply because his father “lived abroad”.
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Speaking in July, 2022, the then Tory leadership contender told Kay Burley he was ‘clearly being smeared’ over tax claims
The cabinet minister has also suggested the trust held the shares because his father was involved in setting up the company, had put money into it and had provided guidance.
Those working at YouGov at the time said Hareth Zahawi was helpful, albeit in an informal way, while others at the firm said he was not involved beyond being a shareholder.
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Evidence from 2005 also appears to show – at that point, before he became an MP – Nadhim Zahawi was benefitting from this offshore trust.
A financial document published by YouGov sets out that a dividend payment that was due to go to Balshore instead was used to pay off loans owed by Mr Zahawi.
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Labour calls for Zahawi to be sacked
Potential tax saving uncovered
Much of this detail was first uncovered by Dan Neidle – a lawyer who used to work for a top corporate and now runs a not-for-profit focussed on tax policy.
Tory sources have briefed that Mr Neidle – who is a Labour member – is a “Labour activist” and the allegations are merely taken from his “blog”.
This comes after lawyers acting for Mr Zahawi sent Mr Neidle a series of letters last year threatening legal action if he continued to publish analysis of the Tory MP’s financial affairs.
After digging through pages of documents, Mr Neidle had suggested there would have been a potential tax saving of several million pounds when Balshore sold its YouGov shares.
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Zahawi asked if he settled with HMRC
That’s because they were held in an offshore trust rather than by Mr Zahawi directly, and hence not eligible for capital gains tax.
It’s this figure that is at the centre of the repayment to HMRC.
“As a senior politician I know that scrutiny and propriety are important parts of public life. Twenty-two years ago I co-founded a company called YouGov. I’m incredibly proud of what we achieved. It is an amazing business that has employed thousands of people and provides a world-beating service.
“When we set it up, I didn’t have the money or the expertise to go it alone. So I asked my father to help. In the process, he took founder shares in the business in exchange for some capital and his invaluable guidance. Twenty-one years later, when I was being appointed chancellor of the exchequer, questions were being raised about my tax affairs. I discussed this with the Cabinet Office at the time.
“Following discussions with HMRC, they agreed that my father was entitled to founder shares in YouGov, though they disagreed about the exact allocation. They concluded that this was a ‘careless and not deliberate’ error.
“So that I could focus on my life as a public servant, I chose to settle the matter and pay what they said was due, which was the right thing to do.
“Additionally, HMRC agreed with my accountants that I have never set up an offshore structure, including Balshore Investments, and that I am not the beneficiary of Balshore Investments. This matter was resolved prior to my appointments as chancellor of the duchy of Lancaster and subsequently chairman of the party I love so much. When I was appointed by the prime minister, all my tax affairs were up to date.”
Tax affairs up to date
Mr Zahawi has now confirmed that tax was repaid saying that HMRC had concluded his father was not entitled to the share allocation handed to him when YouGov was created.
The Tory chairman said this was a “careless and not a deliberate error” and didn’t confirm if any penalty was also levied.
He also re-stated that he was not a beneficiary of Balshore Investments and had never set up an offshore structure.
However, this intervention clashes somewhat with previous assertions that his tax affairs “were and are fully up to date”.
It also looks somewhat awkward given his attempts to silence those looking into his tax affairs and his statement to Sky News last year that people were trying to “smear” him over his business dealings.
There are also still unanswered questions, including the pointed one of whether someone who was chancellor a matter of months ago was issued with a penalty by HMRC for failing to pay the right amount of tax.
Along the thin strip of beach and woodland known as the Vistula Spit which marks the northernmost demarcation between Poland and the Russian exclave of Kaliningrad, there is not much in the way of a border.
Just some torn wire fencing and a few rotten posts which seem to stagger drunkenly into the shallows of the Baltic Sea.
Beneath a sign barring entry, we find a couple of empty bottles of Russian cognac and vodka.
Image: This doesn’t feel like the edge of NATO territory
“I don’t see much protection. It’s not good,” says Krzysztof from Katowice, who has come to inspect the border himself.
“We have to have some kind of scare tactic, something to show that we are trying to strengthen our army,” says Grzegorz, who lives nearby.
“At the same time I think I would not base the defence of our country solely on our army. I am convinced that Europe or America, if anything were to happen, will help us 100%.”
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Poland is investing massively in its defence, with military spending set to hit 4.7% of GDP in 2025, more than any other NATO country.
Polish Prime Minister Donald Tusk has said he will introduce voluntary military training for men of any age, and women too should they wish, so the army has a competent reserve force in the event of war.
Image: Border between EU and the Russian Federation
He is investing $2.5bn in stronger border fortifications between Russia and Belarus, a project called East Shield which will include anti-tank obstacles, bunkers and potentially minefields too.
Along with its Baltic neighbours, Poland is withdrawing from the Ottawa convention against the use of land mines. It hasn’t committed to using them, but it wants to have that option.
We’ve been granted access to one of the cornerstones of Polish, and European defence, which is a couple of hours drive from the Vistula spit at the Redowicze military base.
Image: Aegis Ashore Poland
Aegis Ashore Poland, together with its sister site in Romania, are the land-based arms of NATO’s missile defence shield over Europe, which is run by the US navy.
They are symbols of the US commitment to NATO and to the protection of Europe.
Image: The control room at Aegis Ashore Poland
And despite changes at the top of the Pentagon it is “business as usual”, says Captain Michael Dwan who oversees air and missile defence within the US Sixth Fleet.
“Our mission to work with NATO forces has been unchanged. And so our commitment from the United States perspective and what capability we bring to ballistic missile defence and the defence of NATO is championed here in Poland.”
Image: The control room at Aegis Ashore Poland
As far as Russia is concerned, NATO’s two missile defence bases in Romania and Poland represent a NATO threat on their doorstep and are therefore a “priority target for potential neutralisation”, per Russia’s foreign ministry.
NATO says the installations are purely defensive and their SM-3 interceptor missiles are not armed and are not intended to carry warheads. Russia counters they could easily be adapted to threaten Russia.
“It’s not a matter of moving offensive weapons here into the facility, the hardware and the infrastructure is simply not installed.
“It would take months or years to change the mission of this site and a significant amount of money and capability and design.”
With so much marked “secret” on the site, it seems amazing to be granted the access.
But for NATO, transparency is part of deterrence. They want potential adversaries to know how sophisticated their radar and interception systems are.
They know that if they carried warheads on site, that would make them a target so they don’t.
Deterrence also depends on whether potential adversaries believe in the US’s commitment to NATO and to Europe’s defence.
On an operational level, as far as the troops are concerned, that commitment may still be iron-clad.
But as far as its commander-in-chief goes, there is still – as with so much around Donald Trump’s presidency – a great deal of uncertainty.
In the Oval Office on Wednesday afternoon President Trump suggested he might bundle a potential US troop drawdown in Europe together with the issue of EU trade and tariffs.
“Nice to wrap it up in one package,” he said, “it’s nice and clean”.
Probably not the way Europe sees it, not with a resurgent Russia on their doorstep, economic tailwinds breeding animosity and the notion of Pax Americana crumbling at their feet.
Asian markets have reacted positively after Donald Trump paused his so-called “reciprocal” tariffs on most of America’s trading partners for 90 days, despite the US president increasing those on China to 125%.
However, Japan’s Nikkei share average was up 8.2% by 3.50am BST, while the broader Topix had risen 7.5%.
Similarly, the S&P 500 stock index had jumped 9.5% and global markets bounced back following Mr Trump’s announcement on Wednesday that the increased tariffs on nearly all trading partners would now be paused.
In a post on his Truth Social platform, Mr Trump said the “90-day pause” was for the “more than 75 countries” who had not retaliated against his tariffs “in any way”.
He added that during this period they would still have to pay a “substantially lowered” 10% tariff, which is “effective immediately”.
It is lower than the 20% tariff that Mr Trump had set for goods from the European Union, 24% on imports from Japan and 25% on products from South Korea.
The UK was already going to face a blanket 10% tariff under the new system.
Mr Trump said the increased 125% tariff on imported goods from China was “effective immediately”.
He added: “At some point, hopefully in the near future, China will realise that the days of ripping off the USA, and other countries, is no longer sustainable or acceptable.”
What’s in Trump’s tariff pause?
Here’s what Donald Trump’s tariff pause entails:
‘Reciprocal’ tariffs on hold
• Higher tariffs that took effect today on 57 trading partners will be paused for 90 days
• These include the EU, Japan and South Korea, all of which will face a baseline 10% duty instead
• Countries that already had a 10% levy imposed since last week – such as the UK – aren’t affected by the pause
China tariffs increased
• Trump imposed a higher 125% tariff on China
• That’s in addition to levies he imposed during his first term
• China had hit the US with 84% tariff earlier today, following tit-for-tat escalations
No change for Canada or Mexico
• Canadian and Mexican goods will remain subject to 25% fentanyl-related tariffs if they don’t comply with the US-Mexico-Canada trade agreement’s rules of origin
• Compliant goods are exempt
Car and metal tariffs remain
• Trump’s pause doesn’t apply to the 25% tariffs he levied on steel and aluminium in March and on cars (autos) on 3 April
• This 25% tariff on car parts does not come into effect until 3 May
Sectors at risk
• Copper, lumber, semiconductors, pharmaceuticals and critical minerals are expected to be subject to separate tariffs, in the same way autos are
Hours after Mr Trump announced the pause on tariffs for most countries, a White House official clarified that this did not apply to the 25% duties imposed on some US imports from Mexico and Canada.
The tariffs were first announced in February and Mexico and Canada were not included in the “Liberation Day” announcements.
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It meant tariffs of 84% would be enforced on US goods – up from the 34% China had previously planned.
Image: Mr Trump spoke to reporters in the Oval Office. Pic: Reuters
China ‘want to make a deal’
Asked why he posted “BE COOL” on Truth Social hours before announcing his tariff pause, Mr Trump told reporters at the White House: “I thought that people were jumping a little bit out of line.”
“They were getting yippy, you know, were getting a little bit yippy, a little bit afraid,” he added.
Mr Trump continued: “China wants to make a deal, they just don’t know how to go about it.
“[They’re] quite the proud people, and President Xi is a proud man. I know him very well, and they don’t know quite how to go about it, but they’ll figure it out.
“They’re in the process of figuring out, but they want to make a deal.”
White House press secretary Karoline Leavitt said the walk back was part of a grand negotiating strategy by Mr Trump.
“President Trump created maximum negotiating leverage for himself,” she said, adding that the news media “clearly failed to see what President Trump is doing here”.
US Treasury Secretary Scott Bessent also insisted Mr Trump had strengthened his hand through his tariffs.
“President Trump created maximum negotiating leverage for himself,” he said.
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Mr Bessent said Mr Trump decided to raise tariffs on China because Beijing hadn’t reached out to the US and instead increased its own levies on US goods.
Downing Street said that the UK will “coolly and calmly” continue its negotiations with the US.
A Number 10 spokeswoman said: “A trade war is in nobody’s interests. We don’t want any tariffs at all, so for jobs and livelihoods across the UK, we will coolly and calmly continue to negotiate in Britain’s interests.”
Along the thin strip of beach and woodland known as the Vistula Spit which marks the northernmost demarcation between Poland and the Russian exclave of Kaliningrad, there is not much in the way of a border.
Just some torn wire fencing and a few rotten posts which seem to stagger drunkenly into the shallows of the Baltic Sea.
Beneath a sign barring entry, we find a couple of empty bottles of Russian cognac and vodka.
Image: This doesn’t feel like the edge of NATO territory
“I don’t see much protection. It’s not good,” says Krzysztof from Katowice, who has come to inspect the border himself.
“We have to have some kind of scare tactic, something to show that we are trying to strengthen our army,” says Grzegorz, who lives nearby.
“At the same time I think I would not base the defence of our country solely on our army. I am convinced that Europe or America, if anything were to happen, will help us 100%.”
More on Nato
Related Topics:
Poland is investing massively in its defence, with military spending set to hit 4.7% of GDP in 2025, more than any other NATO country.
Polish Prime Minister Donald Tusk has said he will introduce voluntary military training for men of any age, and women too should they wish, so the army has a competent reserve force in the event of war.
Image: Border between EU and the Russian Federation
He is investing $2.5bn in stronger border fortifications between Russia and Belarus, a project called East Shield which will include anti-tank obstacles, bunkers and potentially minefields too.
Along with its Baltic neighbours, Poland is withdrawing from the Ottawa convention against the use of land mines. It hasn’t committed to using them, but it wants to have that option.
We’ve been granted access to one of the cornerstones of Polish, and European defence, which is a couple of hours drive from the Vistula spit at the Redowicze military base.
Image: Aegis Ashore Poland
Aegis Ashore Poland, together with its sister site in Romania, are the land-based arms of NATO’s missile defence shield over Europe, which is run by the US navy.
They are symbols of the US commitment to NATO and to the protection of Europe.
Image: The control room at Aegis Ashore Poland
And despite changes at the top of the Pentagon it is “business as usual”, says Captain Michael Dwan who oversees air and missile defence within the US Sixth Fleet.
“Our mission to work with NATO forces has been unchanged. And so our commitment from the United States perspective and what capability we bring to ballistic missile defence and the defence of NATO is championed here in Poland.”
Image: The control room at Aegis Ashore Poland
As far as Russia is concerned, NATO’s two missile defence bases in Romania and Poland represent a NATO threat on their doorstep and are therefore a “priority target for potential neutralisation”, per Russia’s foreign ministry.
NATO says the installations are purely defensive and their SM-3 interceptor missiles are not armed and are not intended to carry warheads. Russia counters they could easily be adapted to threaten Russia.
“It’s not a matter of moving offensive weapons here into the facility, the hardware and the infrastructure is simply not installed.
“It would take months or years to change the mission of this site and a significant amount of money and capability and design.”
With so much marked “secret” on the site, it seems amazing to be granted the access.
But for NATO, transparency is part of deterrence. They want potential adversaries to know how sophisticated their radar and interception systems are.
They know that if they carried warheads on site, that would make them a target so they don’t.
Deterrence also depends on whether potential adversaries believe in the US’s commitment to NATO and to Europe’s defence.
On an operational level, as far as the troops are concerned, that commitment may still be iron-clad.
But as far as its commander-in-chief goes, there is still – as with so much around Donald Trump’s presidency – a great deal of uncertainty.
In the Oval Office on Wednesday afternoon President Trump suggested he might bundle a potential US troop drawdown in Europe together with the issue of EU trade and tariffs.
“Nice to wrap it up in one package,” he said, “it’s nice and clean”.
Probably not the way Europe sees it, not with a resurgent Russia on their doorstep, economic tailwinds breeding animosity and the notion of Pax Americana crumbling at their feet.