Chancellor Nadhim Zahawi is under pressure to explain the origin of the £ 26m unsecured loans his family-owned company reported in 2018 as he faces questions about his tax matters.
The millions of pounds of loans helped Zahawi and his wife buy properties across the UK, including commercial and commercial premises in London, Birmingham, Brighton and Walton-on-Thames in Surrey.
The Observer has established that in the same year new loans were reported to the real estate company Zahawi and Zahawi that an offshore family business linked to the chancellor sold shares in YouGov, the survey firm he founded, transferring £ 26 million to an unknown recipient or recipients.
A source close to Zahawi insisted that there was no link between the money transferred from the offshore company, Balshore Investments, and the unsecured loans to his family-owned company, Zahawi and Zahawi.
A spokesman said: “Nadhim and his wife have never been beneficiaries of any offshore trust structure.”
The chancellor is embroiled in growing controversy after the Observer revealed last week that officials have raised a “flag” over their financial affairs. You face calls to identify the lender or lenders who helped finance your real estate business.
Zahawi, who was removed from the Conservative party’s leadership race on Wednesday, said last week that he always paid his taxes and was willing to answer any questions following reports he was under investigation by HMRC. The rector has said that no investigation has been reported or known.
Zahawi, 55, forged his career as an entrepreneur by co-founding market research and research firm YouGov in 2000. However, tax experts are baffled as he was not initially assigned any shares in the company. ‘company, despite being one of its drivers.
While YouGov co-founder Stephan Shakespeare received 351,590 shares in the year the company was founded, Zahawi received none. Instead, shares were allocated to the Gibraltar-based offshore firm Balshore Investments, which is controlled by its parents. It has been reported that Zahawi relied heavily on the support and guidance of his father, who was an experienced businessman.
YouGov shares were allotted to Gals-based Balshore Investments. Photography: Tim Rooke / Rex / Shutterstock
The Gibraltar small business turned out to be a corporate gold mine, as YouGov’s shares rose dramatically. In 2002, the company had assets of just £ 36,280, but that rose to £ 7 million in 2010 and £ 26.5 million in 2017, according to its company accounts. He also received more than £ 700,000 in dividends between 2012 and 2017.
The key assets were YouGov shares, but these were sold in 2017-18 and about £ 26 million was transferred out of the company to an unknown recipient or recipients. YouGov has described Balshore Investment as “a family trust of Nadhim Zahawi’s.” The chancellor has insisted that “he has not and has never had an interest in Balshore Investments and is not a beneficiary of it.”
YouGov built its reputation from Internet-based research, floating in the AIM market of the London Stock Exchange in 2005. Zahawi was CEO and director of YouGov until 2010, when he was elected Conservative MP.
Zahawi and Zahawi was formed in 2010 and used unsecured loans in addition to bank debt to buy properties. Its loans increased from £ 185,831 in 2015 to almost £ 40 million in June 2018, including £ 11.4 million in bank loans and £ 26.6 million in unsecured loans. The chancellor resigned as director of the firm in 2018 and his wife now controls the company. Its investment properties are worth £ 58 million, with a current liability of £ 55.5 million.
Dan Neidle, founder of the nonprofit Tax Policy Associates, said Zahawi should provide more information about the source and repayment agreements of the loans that had financed his family business. “The chancellor is ultimately responsible for the UK tax code,” Neidle said last week in an analysis of the Zahawi family’s business interests. “The public has a right to know if there are specific, obscure provisions of this code from which the chancellor personally benefits.”
Pat McFadden, the chief secretary in the shadow of the Labor Treasury, said: “It is vital that the chancellor make it clear what arrangements he has taken advantage of in his financial affairs and where this money has been borrowed.
“The public has a right to know. Workers would abolish non-nationality status to create more equity and transparency in the tax system. “
Zahawi was removed from the Conservative party’s leadership campaign last week after getting 25 votes in the party’s parliamentary elections. During his campaign, he pledged to publish his tax return every year if he became prime minister.
A Nadhim Zahawi spokesman said: “Nadhim and his wife have never benefited from any offshore trust structure and have not owned any property through offshore tax structures. Any suggestion that Nadhim has avoided taxes through offshore structures is false. “.