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Nadhim Zahawi is ‘under investigation by HM Revenue & Customs over his tax affairs’ after Downing Street officials ‘flagged concerns’ to before his appointment as Chancellor.

Offshore tax specialists ‘launched a probe’ into the finances of the Tory leadership candidate after they were handed information by the National Crime Agency (NCA) – known as ‘Britain’s version of the ‘.

Following the NCA investigation in 2020, ‘no evidence was found that met the criteria to bring criminal charges’. 

Experts from the Serious Fraud Office (SFO) are also believed to have investigated the newly appointed chancellor’s finances, reports .   

Mr Zahawi, 55, denied any wrongdoing and promised to fully co-operate with any queries, following a report in .

A spokesperson told the newspaper: ‘All Mr Zahawi’s financial interests have been properly and transparently declared.

‘Mr Zahawi is not aware of any formal investigation by HMRC. His taxes are all fully paid and up to date. He will provide full information to any queries that HMRC have about his tax affairs.’

A senior Whitehall source also told The Independent the investigation, under the control of the Treasury which Mr Zahawi began running just three days ago, is currently ‘unresolved’.

The PM, home secretary Priti Patel and the Cabinet Office were all informed of the investigations prior to Mr Zahawi’s appointment. 

The inquiry comes after civil servants in the Cabinet Office’s propriety and ethics team reportedly told Boris Johnson about a HRMC ‘flag’ before he was appointed as chancellor,  reports.

A source told the newspaper: ‘It’s extraordinary that flags were raised ahead of Nadhim’s appointment by the Downing Street proprietary team.

‘These sorts of concerns would stop someone receiving an MBE or OBE. The idea he could be chancellor or even prime minister is unbelievable’.  

A Cabinet Office spokesperson told MailOnline: ‘Under the Ministerial Code, Ministers must ensure that no conflict arises, or could reasonably be perceived to arise, between their Ministerial position and their private interests, financial or otherwise.

‘The Chancellor has followed the process set out in the Ministerial Code and complied with those requirements to the satisfaction of the previous Independent Advisers.’

Meanwhile, Mr Zahawi launched his pitch for the Conservative leadership last night with a thinly veiled swipe at his rival Rishi Sunak, saying that ‘we cannot tax our way into prosperity’.

He previously served as Education Secretary, which he took over from Gavin Williamson last September. 

Mr Zahawi appeared to take aim at the man he replaced as Chancellor in dramatic circumstances last week by declaring that ‘the burden of tax is too high’.

The comments will be seen as a bid to woo Tory MPs who accuse Mr Sunak of trashing the Tories’ low-tax credentials.

But The Mail on Sunday was told that Mr Zahawi began distancing himself from his predecessor within 24 hours of replacing him. 

Sources said Mr Zahawi told a Tory fund-raising event on Wednesday that ‘being Conservative Chancellor with Conservative values meant being the party of low tax’.

Coincidentally, the new Chancellor was speaking at the same Carlton Club venue where a week earlier the ex-Tory deputy whip Chris Pincher was accused of groping two men in an incident that ultimately led to Boris Johnson’s resignation.

Mr Zahawi’s leadership launch came amid claims that he did himself ‘immense damage’ last week by accepting promotion from Mr Johnson only to then call on him to step down.

One fellow Minister and ackack.net Johnson loyalist said last night: ‘Nadhim’s behaviour last week has put a lot of people off him.’

However, sources close to Mr Zahawi told The Mail on Sunday that the Prime Minister ‘holds no grudges’ over his behaviour last week and wants him to deliver ‘a Conservative economic strategy’ as Chancellor.

Mr Zahawi, who also served as the Covid vaccines minister during the pandemic, put reducing taxes at the heart of his pitch to succeed Mr Johnson.

The millionaire ex-businessman, who co-founded the polling company YouGov and built a £100million property portfolio, said: ‘The burden of tax is simply too high.

‘As an entrepreneur and businessman, I know that lower taxes are how we create a thriving and dynamic economy.’

Insisting that ‘taxes for individuals, families and business’ would be lower ‘on my watch’, Mr Zahawi added: ‘Overseeing the highest tax burden since 1949 is not the Conservative way. We cannot tax our way into prosperity.’

As a Kurd who was born in Iraq and arrived in the UK at age 11 speaking no English, he has previously hailed Britain as the ‘best country in the world’.

But yesterday Mr Zahawi – who also said ‘the Conservative Party has made me who I am today’ – warned that the Britain of ‘boundless optimism and opportunity’ that existed under Margaret Thatcher had been lost.

Reaching out to Conservative Brexiteers, however, he appeared to raise Britain’s departure from the EU as one way to restore those lost opportunities. He said: ‘Thanks to Brexit, we are now a free nation. Let’s not just talk about the opportunities that follow, let’s take them.’

Mr Zahawi also vowed to increase defence spending and continue with his education reforms.

MailOnline has contacted HMRC for comment. 

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