Prime Minister Rishi Sunak could be serving up a win for Labour. PA
Prime Minister Rishi Sunak could be serving up a win for Labour. PA
Prime Minister Rishi Sunak could be serving up a win for Labour. PA
Prime Minister Rishi Sunak could be serving up a win for Labour. PA


Tory sleaze should hand election victory to Labour and Keir Starmer on a plate


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January 24, 2023

When we look back and determine where the next election was won and lost, the weekend just gone will be a strong contender.

Against a backdrop of public sector strikes, which he has failed to resolve and displayed little inclination to do so, rising household bills and crisis-torn NHS, Rishi Sunak had to deal with two counts of the Tories yet again lowering standards in public life.

Oh, and he also had a third, personal embarrassment, one entirely of his own making, as he was fined £100 for failing to wear a seat belt while recording a promotional video.

If the latter was pathetic and a genuine mistake — Sunak comes across as the sort who would always take safety precautions — the first two were much more serious.

Just as the Prime Minister was eagerly trying to tell us that under him things would be better, up popped twin allegations of Tory sleaze. He must feel it’s reminiscent of a horror movie where right at the end the hand emerges from the murky water. They’re still alive, there will be a sequel!

For Keir Starmer, Tories playing fast and loose with the rules is the gift that keeps on giving. The Labour leader still struggles to win hearts. He does well where minds are concerned, but there’s that lingering suspicion the country does not warm to him the way it should by now.

Labour party leader Keir Starmer has struggled to win the hearts of the British public. PA
Labour party leader Keir Starmer has struggled to win the hearts of the British public. PA

Despite the yawning gap in the polls, Sunak could yet pull off a surprise.

Then, first along comes the Tory chairman, Nadhim Zahawi, and his run-in with the Inland Revenue; then second, Boris Johnson is revealed to have been assisted in the securing of an £800,000 ($984,780) loan for his household expenses by a friend, Richard Sharp, who Johnson later appointed to chair the BBC.

Zahawi says he was “careless” when he ended up paying £4.8 million, including a penalty, to the taxman over his shares in YouGov, the polling firm he cofounded.

He’s denied that he avoided tax by using an offshore company registered in Gibraltar to hold the stock. Sunak has asked his standards adviser, Sir Laurie Magnus, to investigate.

I’ve met Zahawi on several occasions and, how can I put this, he did not strike me as someone who would make an error regarding a tax bill of that size. The impression he likes to convey is just how able and smart he is.

With Nadhim Zahawi it’s hard to imagine someone known for being thorough and meticulous making a mistake with his personal tax. AFP
With Nadhim Zahawi it’s hard to imagine someone known for being thorough and meticulous making a mistake with his personal tax. AFP

Indeed, that was his reputation as a minister with a department to run. He earned positive reviews for his efficiency and clarity of thought. He was, don’t forget, in charge of the Covid vaccination programme and by all accounts, did a thorough job. He was also chancellor for a period.

Oddly, that’s what his colleagues said as they made the traditional guarded comments bigging up a fellow Cabinet member who is under the cosh. They would not be drawn on the specifics but they stressed what an able minister he’d been.

Zahawi was that rare beast, a successful businessman who moved smoothly into politics and Whitehall.

You were never left in no doubt that he was rich. His immaculate appearance, his tailored clothes and watch, they smacked of money.

His shtick was that he could teach the civil servants a lesson or two, that he knew how to get things done. It’s hard to imagine someone who liked to be so across everything making a mistake with his personal tax.

Johnson's high-flying lifestyle

So to Johnson. It’s the subject of his household expenses that continues to dog him.

How Johnson paid for his lifestyle, while on a prime minister’s salary, was a regular topic for speculation at Westminster. He had Carrie and their young family to support, there were his other children, he’d taken a large cut on becoming leader, giving up his lucrative Daily Telegraph column. How was he affording it?

The answer is that he wasn’t. Not really. He was lurching, such is the Johnson way, from one scrape to another. Short of cash, he turned to his pal, Sharp, a former high-flying banker who, in Sharp’s words “simply connected” people and Johnson obtained the money.

Boris Johnson dismissed Richard Sharp loan story and headed to Ukraine. AFP
Boris Johnson dismissed Richard Sharp loan story and headed to Ukraine. AFP

Multimillionaire Canadian businessman, Sam Blyth, a distant cousin of Johnson, acted as guarantor.

At the time, Sharp was applying to be the BBC chairman. Neither Sharp nor Johnson could see any conflict of interest. I first knew Sharp when he was at Goldman Sachs and since. He’s a calculating individual, clever.

I admit to being surprised when he was announced as BBC chairman. I always thought that he had a fairly disparaging view of the process of news journalism, having spent decades at Goldman and sharing their regard for privacy and secrecy.

Like Zahawi, Sharp finds himself the subject of a review, this one by the Commissioner of Public Appointments, William Shawcross.

Johnson says the story is “rubbish” and hot foots it to Ukraine, as if to remind everyone that he is above this minor tittle-tattle or as he would doubtless say, “piffle”, and what concerns him is truly world statesmanlike issues such as Russia’s onslaught.

Scandals are sharp reminders

What should concern Sunak is that he and his colleagues can no longer manage this sort of scandal. Try as they might to blank out queries, to obfuscate and to try to bat the affair away, the mud sticks.

By and large the public is not fooled: Sunak and co are defending the indefensible. Research by Find Out Now found that 59 per cent of people want Zahawi sacked. Only 14 per cent said he should stay, while the rest said they did not know either way.

The one silver lining for Sunak is that talk of a Johnson comeback looks misplaced. Before the story of the loan and the BBC appointment broke, the gossip at Westminster was of Johnson and his supporters preparing a coup.|

That was on the basis that Sunak is not popular, that Johnson was responsible for single-handedly (so the legend goes) delivering a thumping Tory majority and only he can do it again.

Then arises a tale that serves to remind the electorate and Tory MPs why more than 50 of them resigned from his government and why he had to go.

Sadly, the ultimate loser in all this is the public. Just when we thought that a corner might have been turned, that Sunak and Starmer were decent if somewhat dull rivals but that we craved dull after the turmoil of the Boris years, the swamp proves otherwise.

There can’t be any more, can there? Unfortunately, given the Tories’ record, there can only be one answer.

Ten tax points to be aware of in 2026

1. Domestic VAT refund amendments: request your refund within five years

If a business does not apply for the refund on time, they lose their credit.

2. E-invoicing in the UAE

Businesses should continue preparing for the implementation of e-invoicing in the UAE, with 2026 a preparation and transition period ahead of phased mandatory adoption. 

3. More tax audits

Tax authorities are increasingly using data already available across multiple filings to identify audit risks. 

4. More beneficial VAT and excise tax penalty regime

Tax disputes are expected to become more frequent and more structured, with clearer administrative objection and appeal processes. The UAE has adopted a new penalty regime for VAT and excise disputes, which now mirrors the penalty regime for corporate tax.

5. Greater emphasis on statutory audit

There is a greater need for the accuracy of financial statements. The International Financial Reporting Standards standards need to be strictly adhered to and, as a result, the quality of the audits will need to increase.

6. Further transfer pricing enforcement

Transfer pricing enforcement, which refers to the practice of establishing prices for internal transactions between related entities, is expected to broaden in scope. The UAE will shortly open the possibility to negotiate advance pricing agreements, or essentially rulings for transfer pricing purposes. 

7. Limited time periods for audits

Recent amendments also introduce a default five-year limitation period for tax audits and assessments, subject to specific statutory exceptions. While the standard audit and assessment period is five years, this may be extended to up to 15 years in cases involving fraud or tax evasion. 

8. Pillar 2 implementation 

Many multinational groups will begin to feel the practical effect of the Domestic Minimum Top-Up Tax (DMTT), the UAE's implementation of the OECD’s global minimum tax under Pillar 2. While the rules apply for financial years starting on or after January 1, 2025, it is 2026 that marks the transition to an operational phase.

9. Reduced compliance obligations for imported goods and services

Businesses that apply the reverse-charge mechanism for VAT purposes in the UAE may benefit from reduced compliance obligations. 

10. Substance and CbC reporting focus

Tax authorities are expected to continue strengthening the enforcement of economic substance and Country-by-Country (CbC) reporting frameworks. In the UAE, these regimes are increasingly being used as risk-assessment tools, providing tax authorities with a comprehensive view of multinational groups’ global footprints and enabling them to assess whether profits are aligned with real economic activity. 

Contributed by Thomas Vanhee and Hend Rashwan, Aurifer

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Labour dispute

The insured employee may still file an ILOE claim even if a labour dispute is ongoing post termination, but the insurer may suspend or reject payment, until the courts resolve the dispute, especially if the reason for termination is contested. The outcome of the labour court proceedings can directly affect eligibility.


- Abdullah Ishnaneh, Partner, BSA Law 

Updated: January 24, 2023, 1:09 PM