Nadhim Zahawi has been sacked as Conservative Party chairman by Rishi Sunak, after an ethics inquiry into the handling of his tax affairs found a “serious breach” of the ministerial code.

It comes after the Prime Minister ordered an investigation into Mr Zahawi by Sir Laurie Magnus, his independent adviser on ministers’ interests, following reports that the Tory chairman had paid a penalty as part of an estimated £4.8 million settlement dispute with HMRC.

In a letter to Mr Zahawi, Mr Sunak said that, following the investigation, which completed its work after only a few days, “it is clear that there has been a serious breach of the ministerial code”.

“As a result, I have informed you of my decision to remove you from your position in His Majesty’s Government.”

Handout image of a letter from Prime Minister Rishi Sunak to Nadhim Zahawi who has been sacked as Conservative Party chairman
Handout image of a letter from Prime Minister Rishi Sunak to Nadhim Zahawi who has been sacked as Conservative Party chairman (10 Downing Street/PA)

Mr Sunak and his Government had faced questions for several days about the row, with growing pressure on Mr Zahawi to stand aside.

In the letter, Mr Sunak told the Tory MP: “When I became Prime Minister last year, I pledged that the Government I lead would have integrity, professionalism and accountability at every level.”

He paid tribute to Mr Zahawi’s contribution to the Government, including his role as vaccines minister during the pandemic.

“As you leave, you should be extremely proud of your wide-ranging achievements in Government over the last five years.

“In particular, your successful oversight of the Covid-19 vaccine procurement and deployment programme which ensured the United Kingdom was at the forefront of the global response to the coronavirus pandemic.”

New Independent Adviser
Sir Laurie Magnus carried out an investigation into Nadhim Zahawi (David Parry/PA)

Sir Laurie’s four-page report, dated January 29 and setting out in detail the circumstances of Mr Zahawi’s tax affairs and communications with HMRC, found that the Tory chairman had shown “insufficient regard for the general principles of the ministerial code and the requirements in particular, under the seven Principles of Public Life, to be honest, open and an exemplary leader through his own behaviour”.

Mr Sunak is unlikely to appoint a new Conservative chairman by the end of Sunday, the PA news agency understands.

The row surrounding Mr Zahawi had centred on a tax bill over the sale of shares in YouGov – the polling firm he founded – worth an estimated £27 million and which were held by Balshore Investments, a company registered offshore in Gibraltar and linked to Mr Zahawi’s family.

Mr Zahawi, who has been Stratford-on-Avon MP since 2010, had said that HMRC concluded there had been a “careless and not deliberate” error in the way the founders’ shares, which he had allocated to his father, had been treated.

He also insisted he was “confident” he had “acted properly throughout”.

Both Labour and the Liberal Democrats said it is vital that the public now gets answers about what and when Mr Sunak knew about the controversy.

Shadow education secretary Bridget Phillipson, said the Prime Minister should have sacked the Tory MP a “long time ago”.

“The reason this keeps happening is we have a Government whose only principle is party first, country second. The Tories are governing in their own interests, with a Prime Minister who is trying to manage his MPs, rather than govern in the national interest.

“It’s vital that we now get answers to what Rishi Sunak knew and when did he know it. We need to see all the papers, not just have the Prime Minister’s role in this brushed under the carpet,” she said.

Lib Dem deputy leader Daisy Cooper called on Mr Zahawi to go a step further and leave parliament.

“Given this was a serious breach of the ministerial code, Nadhim Zahawi must also do the right thing and resign as an MP,” she said.