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Rishi Sunak
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Tory leadership candidates clash over tax cuts

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Two former chancellors, the current resident of No11 and a qualified management accountant have entered the race to become the next Prime Minister.

 

11th Jul 2022
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Using the slogan 'Let’s restore trust, rebuild the economy and reunite the country', former Chancellor Rishi Sunak was the first to launch his bid to become Conservative Party leader on Friday with a slick video posted on social media.

A number of other Tory MPs connected to the accountancy and tax profession have since made their bids for Number 10 Downing Street. This includes former chancellor Sajid Javid, the current chancellor Nahim Zahawi and qualified management accountant Liz Truss. 

Tax has become a divisive issue in the race to No.10. The majority of the leadership contenders have all promised wide-ranging tax cuts, including slashing corporation tax, reversing the national insurance hike, bringing forward the 1% cut to income tax and freezing business rates. 

The contenders’ tax affairs has also become a battleground in the contest, with candidates having to declare their domicile status in interviews and the current Chancellor having to deny reports that he is the subject of an HMRC investigation. 

While the race to Tory leadership is still open, what is clear is that tax will be a deciding factor in who becomes the next prime minister. Sunak is one of the front runners of the leadership candidates that have either shaped tax policy or are linked to the accountancy profession.

Rishi Sunak: The frontrunner

Rishi Sunak, who was the architect of the furlough scheme and the self employed income support scheme, is leaning on his experience as Chancellor in his leadership campaign. In the video, he said: “I ran the toughest department in government during the toughest times when we faced the nightmare of Covid." 

Sunak resigned as Chancellor on Tuesday after concluding that his approach to the economy was “fundamentally too different” to the Prime Minister's. 

In the leadership video, the ex-Chancellor seemingly alluded to this conflict with Boris Johnson over the economy, and his resistance to cut taxes.

He said, "Our country faces huge challenges. The most serious for a generation... Do we confront this moment with honesty, seriousness and determination, or do we tell ourselves comforting fairy tales that make us feel better in the moment but leave our children worse off tomorrow? Someone has to grip this moment and make the right decisions."

He is the only candidate not promising sweeping tax cuts. 

Sunak rose to prominence during the Covid lockdown. Fresh in the role as Chancellor, Sunak quickly became a household name for his regular appearances at the nightly Downing Street briefings, where he unveiled Covid support initiatives like the coronavirus job support scheme and the self employed income support scheme. 

The then Chancellor also rolled out Covid support loans and other initiatives to revive the economy like the Eat Out to Help Out scheme. He used his fiscal announcements to push 'plan for jobs' measures, where announcements like the kickstart scheme played a role in his attempts to rebuild the economy post-Covid.  

The ubiquitous Chancellor became a cult figure amongst some in the accounting profession, and he even had a beer named after him at the first AccountingWEB Live Expo in Coventry last December, where attendees were able to toast the Chancellor with a 'Rishi Brewnak' beer.  

While support like the furlough scheme protected 11m jobs during the Covid lockdowns, reports of the schemes being exploited through fraud quickly emerged from the accounting community, with the amount lost to fraud and error across all Covid-19 schemes is estimated to be at least £15bn. 

Sunak's approval ratings soared during the Covid crisis, but his teflon image has since slipped post-Covid as his attempts to stem the cost of living crisis in the Spring Statement failed to regain the same hysteria he enjoyed during his honeymoon period and news of his wife’s non-domicile status put him in an awkward position as Chancellor.

Darren Fell, the CEO of Crunch, railed against Sunak’s legacy as Chancellor, saying "Complications created by unnecessary red tape were followed by a complete refusal to find a solution or support limited company directors during Covid-19, despite companies like Crunch submitting simple calculations from past dividends.”

Liz Truss

Sunak’s biggest rival could be an actual accountant. Qualified management accountant and current foreign secretary Liz Truss joined the leadership race today, pledging tax cuts “from day one”. 

While Truss hasn’t outlined the specifics, she suggested in an article in The Telegraph that she would reverse the national insurance rise - which Kwasi Kwarteng reminded BBC Radio 4 listeners that Truss was always against the increase - and she would cut corporation tax. 

Sajid Javid

Former Chancellor Sajid Javid also rumoured threw his hat in the ring to be Party leader. He launched his campaign with a flurry of tax cut pledges. He promised to lower corporation tax to 15%,  scrap the health and social care levy and cut 10p from fuel duty. 

Javid’s previous non-dom status has also been called into question. On BBC’s Sunday Politics, he admitted that he held this status for “four or five years” while he was a banker. 

“Before my public life I had a job that was very international. My first job was in the States, then I lived in the UK, then I lived in Singapore - my tax statuses changed through a lot of that and that is why my tax affairs were very international. In 2009 I moved back to the UK and ever since then I’ve been a tax domiciled in the UK.” 

Javid was Boris Johnson’s first Chancellor, after he was appointed in July 2019. But he resigned four weeks before he was set to deliver his first Budget after he was reportedly asked to sack his team of advisers.

Nadhim Zahawi

Nadhim Zahawi, the current occupant of Number 11 Downing Street, has set his sights on the house next door. Only days into the role as Chancellor, Zahawi hasn’t had a chance to influence tax policy and had to shelve his joint economic statement with Boris Johnson planned for early next week following the prime minister’s resignation. 

After previously hinting that “nothing is off the table” in terms of tax cuts, Zahawi would cut corporation tax, income tax and business rates. 

Before Johnson’s “them’s the breaks" exit, there had been reports that the new Chancellor was looking at scrapping the planned increase of corporation tax next year to 25%.

Zahawi also hit out against inaccurate “smears” over the weekend that he is being investigated by HMRC over his tax affairs. In”I have always declared my financial interests and paid my taxes in the UK,” he said in a statement. 

He said that he would go further to reassure colleagues and commit to publishing his tax returns annually if he became Prime Minister. 

He added that he does not benefit from an offshore trust and in what can be seen as a jab at Rishi Sunak, Zahawi said, “nor does my wife”. 

“I have never been a non-dom, my wife has never been non-dom, she’s never used offshore status, or a company to avoid tax. I have never used offshore companies or services firms based in tax havens for the purchase of property or properties in the UK.”

Other candidates

Other candidates in the race to No10 have also led their campaigns with their tax cutting agendas. Calling herself a “small state, low tax Conservative”, Penny Mordaunt has pledged to halve VAT on fuel and raise income tax threshold for basic and middle earners. 

Jeremy Hunt has joined the majority of the other candidates in saying that he would cut “all taxes”. Like Javid, Hunt would cut corporation tax to 15% and freeze business rates for five years. 

Replies (9)

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By Hugo Fair
08th Jul 2022 21:01

What "links to the accountancy profession" are supposed to apply to Mr Sunak?

He graduated in PPE in 2001 and immediately joined Goldman Sachs (as an Analyst) ... before moving on sequentially to two hedge fund management firms (as a Partner), in 2005 and then in 2010.
He became an MP in 2015 and rapid (if sometimes controversial) progress ensued in government.

He may (hopefully) know something about finance, but I can't see any accountancy experience?

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Replying to Hugo Fair:
Richard Hattersley
By Richard Hattersley
08th Jul 2022 21:55

Hi Hugo
I've rephrased the intro which should clarify his 'links to accountancy'.

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By possep
08th Jul 2022 21:19

He is unqualified and his wife is "non domiciled". He has no chance.

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Replying to possep:
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By Paul Crowley
09th Jul 2022 01:37

Non Dom means no loyalty to UK
But then no different to half of Scotland
Pants on fire prior comments about joint citizenship

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Replying to Paul Crowley:
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By AndyC555
11th Jul 2022 11:58

"Non Dom means no loyalty to UK"

Or could be seen as loyalty to the country of her birth, the country of her parents, the country that she has strong family and business links to.

As any British citizen who has tried to claim a change in domicile to non-British knows, it isn't as easy as just saying so. A perusal of HMRC's own guidelines would have Ms Murthy answering 'yes' she was born abroad, 'yes' she has links to the country of her father's birth and 'yes' she has links to the country of her birth which would have HMRC concluding that she was not a UK domiciled individual.

Thanks (1)
Replying to Paul Crowley:
paddle steamer
By DJKL
13th Jul 2022 11:07

But then no different to over half of England (Given their referendum votes, in the long term, may well lead to the demise of the UK.)

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By Paul Crowley
09th Jul 2022 01:33

What a hypocritical you tube video
He and his family joined the green card wannabe in the USA club.
Wife wants to not contribute her tax dollars to the UK and chooses not to be British
Cannot blame her if husband wants to be a citizen of the USA

Still its just like the manager of national sports teams
Why bother just looking in the small pool of British talent

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Replying to Paul Crowley:
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By AndyC555
11th Jul 2022 11:43

"Wife.... chooses not to be British"

Why should someone born in India to Indian parents want to change her citizenship? Are people not allowed to be proud of non-British heritage?

Should she have become an American citizen when she studied in California? A Dutch citizen when she worked in Holland?

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By Paul Crowley
09th Jul 2022 02:33

Well this guy does not think being fined for lockdown infrigement matters.
So complying with UK law is irrelevant to him

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