Zahawi, the Conservative party chair and a Cabinet minister, reportedly settled a £5 million bill with HMRC, including a penalty fee of about £1 million, last year. He has said it was accepted that the underpayment was “careless and not deliberate” and that he “acted properly throughout”. So it was all just a simple mistake, time to move on?
Perhaps not after HMRC chief executive Jim Harra spoke to the Public Accounts Committee. “Carelessness,” he explained, “is a concept in tax law… There are no penalties for innocent errors in your tax affairs.
“So if you take reasonable care, but nevertheless make a mistake, whilst you will be liable for the tax and for interest if it’s paid late, you would not be liable for a penalty. But if your error was as a result of carelessness, then legislation says that a penalty could apply in those circumstances.”
He added that it can be frustrating if high-profile figures make public comments about their tax affairs with which HMRC disagrees. “We will sometimes feel it’s not the full story,” he lamented.
A Prime Ministerial spokesperson made the really very good and important point that Harra was speaking “generally about tax policy”. Indeed. However, apparently, all that needs to happen for Harra to comment specifically about Zahawi’s tax affairs is for the minister to give his permission. We await with bated breath.