Rishi Sunak has been urged by Labour to “come clean” over what he knew about Nadhim Zahawi’s tax affairs after the PM sacked the Tory party chairman on Sunday.

An ethics inquiry into the handling of Mr Zahawi’s finances found a “serious breach” of the ministerial code and Mr Sunak swiftly removed the Tory chairman from his position.

But the PM remains under pressure to outline what he knew about the investigation into Mr Zahawi’s tax affairs and when.

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Labour’s deputy leader Angela Rayner and chairwoman Anneliese Dodds have written to Mr Sunak asking him to give the public “full transparency”.

The letter includes a range of questions for the prime minister to answer:

• When he was made aware of the HMRC investigation into Zahawi’s tax affairs and if he knew the former Party Chair had agreed a multi-million pound settlement with the taxman

• Why he previously stated at PMQs that all questions on this issue had been answered

• What discussions he had with Zahawi before appointing him to his cabinet

• When he will keep his promise to publish his own tax return for the 2022/23 tax year

• If any Conservative ministers had failed to submit their declaration of interests, and when the next register would be published.

Ms Dodds described Mr Sunak as “weak” for not sacking Mr Zahawi “when this murky affair first surfaced”.

“We need to know precisely what Rishi Sunak knew about Zahawi’s tax affairs and the HMRC investigation, why he was appointed to the cabinet in the first place, and when the prime minister will be transparent about his own tax return,” she said.

Ms Rayner added: “Rishi Sunak shouldn’t have needed an ethics adviser to tell him that Nadhim Zahawi’s position was untenable, but instead he continued to prop up the man he appointed to cabinet.

“He must now come clean on the advice he was given about that appointment in the first place and why he apparently ignored the warnings.”

Speaking to Sky News on Monday morning, shadow international trade secretary Nick Thomas-Symonds suggested the PM could have been lying about what he knew about Mr Zahawi’s tax affairs.

“We do know from Sir Laurie Magnus’ report that in the July, Mr Zahawi had declared that he was under investigation by HMRC.

“Now that should have been in itself a red flag to the prime minister. But nonetheless, the prime minister went on, made the appointment to his cabinet.

“The prime minister should now be coming out and giving us an explanation of these matters.”

Asked whether he believes Mr Sunak has lied about what he knew of the matter, Mr Thomas-Symonds added: “How could the prime minister not have known about the fact of the investigation when Mr Zahawi declared it in July?”

Mr Sunak had resisted earlier calls from opposition parties to sack Mr Zahawi as Tory party chairman following reports that he had paid a penalty as part of an estimated £4.8m settlement dispute with HMRC.

He had instead asked his new ethics adviser – Sir Laurie Magnus – to assess whether the settlement amounted to a breach of the ministerial code.

In a letter written by Sir Laurie to the PM on Sunday morning following the conclusion of the investigation, the ethics adviser said Mr Zahawi had “shown insufficient regard for the general principles of the ministerial code” and had not fulfilled the requirements of being an “honest, open and an exemplary leader”.

In the correspondence to Mr Sunak released by Downing Street, Sir Laurie said his overall judgement was that the “omissions” by Mr Zahawi regarding his tax affairs “constitute a serious failure to meet the standards set out in the ministerial code”.

In a second letter written by the PM to Mr Zahawi following Sir Laurie’s findings, Mr Sunak said it is “clear that there has been a serious breach of the ministerial code” and announced the removal of the Tory chairman from his ministerial position.

Informing Mr Zahawi of his decision to remove him from government, Mr Sunak wrote: “Following the completion of the independent adviser’s investigation – the findings of which he has shared with us both – 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.”

Read more:
Who is Nadhim Zahawi? The politician sacked over his tax affairs?
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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 £27m – which were held by Balshore Investments, a company registered offshore in Gibraltar and linked to Mr Zahawi’s family.

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Mr Zahawi had insisted he was “confident” he had “acted properly throughout”.

Liberal Democrat deputy leader Daisy Cooper has called on Mr Sunak to withdraw the Conservative whip from Mr Zahawi “if he refuses to stand down as an MP” as he is “simply not fit to represent his constituents”.

In a letter to Mr Sunak following his sacking – in which he made no apology for his actions – Mr Zahawi told the PM he can be “assured of my support from the backbenches in the coming years”.

Speaking to Sky News on Monday, Health minister Helen Whately said she thought the PM followed a “fair” process when deciding to sack former Conservative party chairman.

Ms Whately said Mr Zahawi had “opportunities” to be “more transparent” about his tax affairs, adding: “The prime minister didn’t know about the things that have come out.”

While senior Conservative MP Tobias Ellwood told Sky News Mr Zahawi had to go as Tory party chairman because the question of whether he remained a minister had become the “dominating issue” in politics.