neidle zahawi

Don't mess with the taxman.


What began as a blog entry by Clifford Chance's ex-head of tax has snowballed into a political scandal which threatens to claim the head of Nadhim Zahawi, the Tory party chairman.

Dan Neidle, who left Clifford Chance to set up Tax Policy Associates, spotted that a Gibraltar company linked to Zahawi was held by a trust controlled by the MP's parents. He surmised that after setting up YouGov, Zahawi had given them his founder shares in the company to avoid tax. When he said as much in a blog, Zahawi called in the lawyers.

Neidle told RollOnFriday, "the next bit - the legal threats from Zahawi - was so weird. I couldn't believe he was doing it. And it made me certain he was trying to hide something..."

Instead of retreating, the tax lawyer drew attention to Zahawi's shifting excuses and heavyhanded tactics by publishing the correspondence he received from Osborne Clarke threatening legal action if he didn't back off.

"It’s outrageous that Zahawi thinks he can not only use libel law to shut people up, [but] do it in secret", recalled Neidle, who took his complaint to the SRA.

The regulator responded by warning solicitors to "ensure that you do not mislead recipients of your correspondence" by "labelling or marking correspondence ‘not for publication’, ‘strictly private and confidential’ and/or ‘without prejudice’ when the conditions for using those terms are not fulfilled".

"Such markings cannot unilaterally impose a duty of privacy or confidentiality where one does not already exist", it said.

Neidle's prime target continued to evade questions about his obscure tax affairs, but in January reporters discovered that while he was chancellor, Zahawi had paid millions to HMRC to settle an outstanding tax bill, which included a 30% penalty for 'carelessness'.

The revelation that Zahawi had been conducting negotiations with tax inspectors over apparent tax avoidance at the same time that he was effectively in charge of HMRC led to calls for his resignation.

The scandal prompted Rishi Sunak to concede that there are "questions that need answering", and he has ordered an investigation into the matter by the government's independent ethics adviser.

Neidle said, "I thought he was hiding a failed tax avoidance scheme - I had no idea he was actually hiding the fact he was - AT THAT VERY MOMENT - going to HMRC to pay up for the failed scheme". 

The tax lawyer told ROF he had more projects in the pipeline which were "much less politically sexy than the Zahawi story, but I think ultimately much more important. One of them involves bad tax behaviour on a much larger scale than Zahawi. Another involves bad institutional failure which has affected hundreds of thousands of people".

Neidle said, "the pressure would have been hard to bear if not for the huge amount of support I've had. Former colleagues. Former clients. A large information team of accountants, lawyers, KCs, retired HMRC officials. I'm sure Zahawi had a large and well paid team, but it can't have been a patch on mine".

Zahawi did not respond to a request for comment, and Osborne Clarke declined to comment.


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Comments

Lord Lester 27 January 23 08:53

Nadhim Zahawi is my sort of chap!

tax payer 27 January 23 08:59

Dan Needle should be awarded Nadhim's (planned) knighthood! 

Smirking 27 January 23 08:59

Cue gloating from Dan!

it’s a fair cop and good investigations, but it was driven by political and left wing activism targetting a prominent tory not by a desire to do good. At least admit to that Dan….

Thank you Dan 27 January 23 09:03

Keep up the good work. 

Anon 27 January 23 09:03

The CC and other city tax partners spend their whole lives putting together tax avoidance and minimisation schemes, many of which are arguably unethical even if not illegal. And they get well paid for that too. Dan’s former team (which he headed up) are some of the best in the business at these “structures” using offshore vehicles and trusts to minimise tax and cloud ownership. So forgive me for feeling it is all a bit hypocritical for Dan, having earned much money as one of the leading experts at these schemes, to now be the crusader saying how wrong it all is.

Cc tax 27 January 23 09:05

Dan spotted this scheme because it was invented by London tax lawyers of which he was one of the most prominent! 

Hmm 27 January 23 09:15

From CC website (Dan’s former firm). 

 

  • Real estate tax – We have built up one of the largest international real estate tax groups in the industry specialising in tax complex deal structures….including… trusts and special purpose vehicles….

Anon 27 January 23 09:30

So will Dan also be accountable and explain every tax minimisation structure he and his colleagues have put together? 
 

look at the cc website, where they advise about how to deal with those pesky tax authorities! Search for a a publication you can find they call ‘Tax risk’. 

 

 

Project Blue 27 January 23 10:14

Wasn't Project Blue a failed CC SDLT avoidance scheme?

Anon 27 January 23 11:08

Yes Project Blue, but that’s different you seeeee. When Dan/his colleagues did that avoidance scheme, they did it to help the orphans and the puppies. Not for the 700 quid per hour. 

Anonymous 27 January 23 11:09

The weird world of tribal politics in 2023… in which a red team millionaire who made his money setting up opaque tax avoidance schemes exposes a blue team multi-millionaire for using an opaque tax avoidance scheme.

The little people cheer and boo as the colour of their rosettes dictates.

 

In our next episode: various millionaires on both teams scratch their heads and wonder why this 'drain the swamp' catchphrase is so popular again come election time. Are the people really unable to choose between team red and team blue? How could they be so foolish?

Annoying the right people 27 January 23 12:44

Surely the point here is that as a tax lawyer, he was able to spot the tax that should have been paid but wasn’t by Zahawi, not that because he was a tax lawyer he now has to keep omertà in respect of any and all tax avoidance and evasion he sees.

One suspects if Zahawi had gone to CC in the first place he wouldn’t be in this mess (and likely would have paid the tax owed in the first place)

Deliberate? 27 January 23 13:03

Am I the only person who thinks it looks like something more "ominous" is happening in the article's picture below the cut off in the trouser area.

A tax lawyer 27 January 23 13:18

If you read the posts from DN on his website and on LinkedIn, I'm afraid they do come across like he has a vendetta against Zahawi and, in my view, I see a lot of his posts as self -promotion rather than actually trying to make a difference/a reasoned debate on tax policy. A good example of that is his flawed analysis on the introduction of the VAT zero rate on WSPs mainly benefitting retailers (flawed analysis re: the size of the ONS sample, ignoring the government tampon tax fund which was put in place to fund women's charities before the zero rate could be introduced as a result of constraints (at the time) in EU VAT law). Unfortunately people read the posts but don't consider the detail and think his posts are gospel when they are not. He has never worked in a tax policy role!

He may not be wrong in relation to this particular point about Zahawi but, as others have pointed out, he was previously a member of a law firm that advised on a high profile SDLT avoidance scheme that saved (at the time) the QIA millions of pounds in SDLT. Now DN's/that law firm's argument was that was "lawful avoidance" (so it's okay) but the Supreme Court held that it wasn't. And £50 million is a lot of nurses....much more than the reported £4million Zahawi has paid to settle his case with HMRC.

Another tax lawyer 27 January 23 13:53

A tax lawyer is spot on

I read Dan’s blog posts on other matters and he’s a corporate specialist commenting on private client tax and understands very little but isn’t letting that get in the way 

And his teams work seems much more scheme based than a bespoke offshore trust 

Another tax lawyer 27 January 23 14:30

Maybe the hero worshipping of Dan is a bit overdone, but it is a pretty impressive scoop to have Zahawi so bang to rights purely on the back of analysis of public information. Surely the thing that is really newsworthy in the revelations is not that NZ engaged in a tax avoidance scheme in the first place - where the people claim moral equivalence with Dan as a former tax lawyer could have a point (and indeed the Sunaks' own tax affairs) - but the fact that he reached a settlement with HMRC in relation to that scheme when he was Chancellor (or if it happened beforehand, at least when he was a cabinet minister), which seems a pretty uncomfortable conflict of interest and that he threatened libel action against people who sought to report that. Whatever colour your preferred rozette is, that seems pretty hard to defend.

A tax lawyer 27 January 23 15:26

@another tax lawyer - I am not defending it [NZ's] behaviour or actions - he's handled the whole exceptionally badly and quite rightly, if the facts are correct as reported, NZ should be paying up and he should resign.

What I find irritating is DN being portrayed as a hero/tax policy expert in in all this when: (i) he worked for a firm that is likely to have advised on and implemented tax avoidance schemes which, if reported, the average Joe would also have issues with and so I find whatever he says as hypocritical; and (ii) he's never worked in government and is not a tax policy expert.

Being a tax lawyer for 22 years does not make one a tax policy expert as tax policy is much more about economics, driving certain behaviours etc than it is purely about the black letter law, (speaking as someone who has actually worked in government in a number of different tax policy roles before becoming a tax lawyer). DN's posts/comments come across as basic and they fail to grasp or acknowledge (IMHO) the myriad of issues that impact tax policy. It adds further weight to the point I made above that this is more about self-promotion on his part than contributing meaningfully to the debate. But people will continue to read what they read and see his musings on tax policy as the most insightful comments/views they have ever read - they are not! 

Danny 27 January 23 15:41

Dan does have a bit of a need for attention.

And the holier than thou attitude is a bit galling from a tax lawyer whose role involved helping companies minimise and avoid tax. 
 

Look at me everyone….please look at me!!! I am moral. Like me. Please like me and tell your friends about me! Everyone, look over here, here I am. take a selfie with me, if you want. Just please like me.

AAA 27 January 23 16:22

Certainly looks to me like Team Zahawi has gone into PR overdrive and is flooding the ROF comments section ... does the Tory party have its own Troll farm or do the fine folks at CCHQ rent it per diem from the Russians? It is fairly transparent that someone is spending time and efforts diffusing any blame that might be levelled at Zahawi. 

BBB 27 January 23 18:05

I just want to briefly plug my upcoming book. It's called 'Everyone who disagrees with me is a Russian Troll'.

I think this might be a fertile target audience for it.

Tossy McTosspot 27 January 23 18:11

What a bunch of losers. Neidle may be a smug slaphead, but he said Zahawi hadnt paid 3m in tax, Zahawi sued him, and turned out Neidle was right and Zahawi hadn’t paid 3m in tax. Which part of that is hard to understand?

Second tax lawyer again 27 January 23 18:14

You don’t have to be Tory to find Dan annoying, just know some tax 

And I find the idea that hmrc wouldn’t stick it to a chancellor extra hard risible. He doesn’t have control of hmrc and hmrc and the treasury are at daggers drawn most of the time 

Go after corporates not the little politician 28 January 23 13:38

It's easy to go for a right wing ehtnic politician.

Try holding to account corporations or your former clients. 

This guy isn't the Batman of tax or the hero people think he is.

 

Yet another tax lawyer 28 January 23 14:19

The whataboutism here is astonishing.

Even if Dan once applied himself to reducing the tax burden of CLIENTS for whom he is obliged to go as far as possible for (show me a non-HMRC tax lawyer who hasn’t), and even if at some point he/his firm went too far and got that wrong (which should be dealt with appropriately), Dan in his individual capacity is not the same as the minister in charge of the integrity of our tax system who not only deliberately avoided tax but publicly lied about it. On one hand Dan was just doing his job to the best of his ability, on the other NZ was undermining the very foundation of his office. 

If I had inadvertently stumbled across a blatant tax dodge, put my own professional reputation and the reputation of my new organisation on the line by calling out that tax avoidance, been threatened with libel letters about it, doubled down, and was ultimately proved entirely correct I would be smug too.

Anon 29 January 23 02:48

Yet another tax lawyer, why don’t you and Danny get a room? 

A tax lawyer 29 January 23 10:08

@yet another tax lawyer - not sure how you can construe all the comments above as whataboutrism. The point is DN advertises his new venture as a non-profit dedicated to improving tax policy. There are ways and means of achieving that and the methods he uses seem to be at odds with that mission - it seems to me it’s more about grabbing headlines for self-gratification. The other wider point is he’s not a tax policy expert and people need to bear that in mind. He has never worked in government in a tax policy role so he has zero experience in this area. 

Bubble Pricker 30 January 23 18:50

What a bunch of whiners you lot are. So what if he used to advise corporates on tax avoidance; he doesn’t now and he has the skills needed to expose evasion and egregious actions. So what if he has opinions on tax policy, we all do and he is better placed than most (including all of our politicians) to put forward opinions worth listening to. I suspect this forum is heavily populated by amoral tax advisers and their corporate colleagues at City firms with their snouts in the money trough oblivious to the wider ethical issues of taxation and related policy. Go on piggies, fill your faces and criticise anyone who makes you feel like the little shits that you really are.

You Can't Handle The Truth 30 January 23 19:34

To be fair, it's all nonsense. The letter which instigated his dismissal is nonsense. It says HMRC had him under investigation since 2021, and he only updated his declarations on 15 July 2022 following a letter dated 13 July 2022 which stated he was "under enquiry" by HMRC. HMRC doesn't put people under investigation, it can put people under enquiry. So you can "ner ner ner ner ner" all you want, but notwithstanding his tax avoidance structure being legit or not, the issue at hand was his integrity re declarations, and as lawyers, language is everything. He simply was not under any kind of formal investigation or otherwise, and if HMRC wanted to do so, it could have done so at any point by way of an "enquiry". It did not. So when he didn't report anything, that was fine and he did report at the correct time.

And again even if the structure was not legit, he took legal and accounting advice; you can't just set up fraudulent structures with the aid of lawyers. The lawyers are supposed to say "no, we can't do that". And if litigators are writing you angry letters which upset you and you think are ethically problematic - that's on your sensitive flowerlike disposition and their ethnical dubiousness, not on the client instructing lawyers to protect his rep. He is not responsible in any way for the language used in letters nor the tax structures deployed. He is perfectly entitled to say "minimise my tax obligations and avoid tax however possible", and "write some angry letters to get this leftie off my tits".

This is the hypocrisy of the situation. In essence, you have a bunch of internet losers who are crying about tax avoidance. Tax avoidance is GOOD. Smart people avoid tax. Stupid people pay tax to the UK, a two-bit useless country which went to the dogs decades ago. Tax goes to pay for the incompetence and uselessness of poor people, and if natural selection was allowed to do its job, they'd all have died of homelessness and poverty years ago, and maybe the UK would have been allowed to thrive. Instead the UK has subsidised its own demise. Anyone with any sense leaves the UK at the earliest opportunity for a low or no tax jurisdiction. Sitting there paying most of your income in tax to some ingrates to waste, many of you putting money in your sad little pensions which you can't get out until you're 58, and the government will increase it to 65 in a couple of years, and then you'll die shortly after you're eligible because of the non-existent quality of life in that dark, damp, cold, miserable, unhealthy excuse of swamp. It's all a ploy to protect the inbred peasants from an aging decrepit population. 

ChatGPTips 31 January 23 16:44

And in the morning they did return home to bathe in the warm champagne that is corporate praise and social status render . Ennui shared is ennui halved.

not another tax lawyer 02 February 23 23:14

Bit misleading to describe Project Blue as a tax avoidance scheme

In reality, it was an Islamic financing where the parties sought to avoid having to pay SDLT at a higher rate than they would have done had it not been an Islamic financing.

The answer was still “sorry you have to pay tax in full”. But it was driven by the downsides of structuring, rather tax avoidance as the sole purpose.

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