An internal inquiry has been launched into how the tax affairs of Akshata Murty, daughter of Infosys co-founder Narayana Murthy, were leaked to a newspaper, according to UK media reports on Sunday.
The Whitehall investigation within UK government quarters will look into how the information about the non-domicile status of the wife of Chancellor Rishi Sunak was passed on to 'The Independent' newspaper, which first published the story earlier this week.
According to 'The Sunday Times', Sunak's team believes an Opposition Labour Party supporting government official dubbed ''red throat'' is responsible for the leak.
"There's going to be a full Cabinet Office and HM Treasury investigation into who had that information and if anyone has requested that information. Divulging the tax status of a private individual is a criminal offense," the paper quoted an unnamed senior government official as saying.
The revelation that the Chancellor's wife, who is an Indian national, was ''non-domiciled'' in the UK for tax purposes meant she was not legally bound to pay taxes on her overseas earnings.
This led to allegations of hypocrisy from the Opposition benches, pointing to recent tax rises imposed by the Indian-origin finance minister. The Labour Party accused his family of potentially saving millions as a result of Murty's tax arrangement.
On Friday, Akshata announced that she would pay tax in the UK on all her income to avoid the issue being a continued "distraction" for her husband.
"My decision to pay UK tax on all my worldwide income will not change the fact that India remains the country of my birth, citizenship, parents' home, and place of domicile. But I love the UK too," Murty said in a Twitter statement on Saturday.
It comes as a new opinion poll by Opinium shows Sunak's approval rating dropped by three points to 28 percent since late March and his disapproval rating has risen by eight points to 43 percent.
This reflects the damage to his prospects as a future leader of the Conservative Party and a key candidate tipped to succeed Boris Johnson as Prime Minister.
Meanwhile, 'The Sun reports that Johnson gave his finance minister and neighbor at 11 Downing Street a pep talk over the weekend and convinced him against resigning over the tax storm.
Sunak's team told the newspaper that the prime minister has been "super supportive" of the Cabinet minister.
"He was considering whether he could withstand his family taking this anymore," one of them was quoted as saying.
Within his own Tory party, many are now questioning Sunak's judgment and a Cabinet minister who admires him was quoted as saying: "This might well make him walk away."
(With inputs from PTI)