The next Thought Leader that we spoke to is a professional that frequently updates Finance Monthly and our readers on all things tax in New Zealand. Here Richard Ashby, who has been dealing with New Zealand taxation for over 29 years, introduces us to recent developments in the sector and shares his predictions for the year ahead.

What have been the hottest topics being discussed in New Zealand in relation to tax since we last spoke in September?

For the past few months there have been two separate taxation Bills, making their way through Parliament. Both Bills contain some fairly significant changes that will mostly impact the SME market (in a positive way thankfully), with one of the Bills also providing the required legislation to facilitate NZ’s commitment as a signatory to the Automatic Exchange of Information project, and the introduction of new disclosure rules with respect to NZ’s foreign trust regime. The latter has been the NZ government’s response to the release of the Panama Papers, which suggested NZ was being used as a tax haven by wealthy non-resident individuals. One of the Bills was passed last week and the other is expected to pass pre-31 March (NZ’s tax year end).

There has also been continual discussion concerning BEPS and where NZ is positioned with respect to the various Action Plan’s issued. Most of the commentary coming out of Inland Revenue in this regard, is that NZ already has appropriate legislation in place to apply OECD recommendations.

What do you anticipate for the sector in 2017? Do you believe that there is potential for any significant legislative developments in the next twelve months?

2017 is an election year for NZ, and with an expected budget surplus in May, the present Government is already hinting that there will be personal tax rate reductions, targeted at lower to middle income earners.  There are also likely to be further modifications to the present tax system, aimed at making it easier for taxpayers to comply with their obligations, thereby lowering the cost of compliance (which Inland Revenue has an ongoing project to continually reduce), although I would not expect to see any significant changes over the coming twelve months, bearing in mind the myriad of changes included in the recent two Bills.

As a thought leader in this segment, how are you developing new strategies and ways to help your clients?

 Listening to your clients and fully understanding their needs is essential to providing good, sound tax advice. You have to continually ask questions and ensure you obtain all relevant facts. Once the detail is obtained however, the key to developing new strategies and ways to help you clients, is knowledge of the legislation and keeping abreast of any changes, the opportunities that lie within it to assist your client in obtaining their desired result, and most importantly, the ability to maintain an open mind and constantly question how the rules relevant to your client’s scenario, can be applied to produce the best result.

When you first joined Gilligan Sheppard, what were your goals in driving change within the company?

 Actually, when I joined Gilligan Sheppard (just over 20 years ago), I had basically just completed an eight-year stint with Inland Revenue, and the first day on the job, I discovered I still had so much to learn. What was clear however, was that I now had an ingrained passion for dealing with NZ taxation. This connection had also transformed into a desire to spend as much of my time as I could, assisting clients with their tax issues, particularly as a problem solver, with a goal to obtaining the best outcome when dealing with whatever situation they had got themselves into.

Since becoming a partner of Gilligan Sheppard in 2005, my goal has been to develop a sustainable tax practice within the firm, which has started to become a reality in the past three years, when we decided to separate the practice into three separate business units, one being a dedicated tax team.

How would you evaluate your role and its impact over the last year or so?

In the past twelve months, we have started to promote a tax advisory service to other accounting firms who may not have their own internal tax resource. This has certainly been a learning curve as the nature of the advisory has changed from one of dealing with clients of Gilligan Sheppard who you have a natural relationship of trust with, to dealing with other accounting firms whom you are effectively in competition with for business services work, and the consequent need therefore to build a different type of trust relationship.

Do you have a mantra or motto you live by when it comes to helping your clients with audits and tax-related matters?

Communication is the key – never be afraid to ask a question, be an active listener and never be in a hurry to give advice just for the sake of giving it. When it comes to the Inland Revenue, always be pro-active in your dealings with them, and emotive reactions can be very costly, so always ensure your client focuses on the economics of any Inland Revenue dispute, and does not get caught up in the emotions of having to win.

To hear about tax practices in the UK, this month we spoke with Rebecca Potton - a Chartered Tax Advisor with 15 years’ experience and Head of the Private Client department at Myers Clark, Chartered Accountants.

 Established in 1912, Myers Clark is one of the largest independent firms of chartered accountants in Watford, UK. Myers Clark offers a broad range of services for thousands of businesses and individuals, as well as national and local organisations in the Not-For-Profit sector.

Can you tell FM a little about the services you provide and the kind of clients you deal with?

 We are able to provide a full range of services including accounts, tax returns, tax planning, trustee and executorship. I also act as an expert witness often in cases of matrimonial disputes.

Myers Clark is very fortunate to have a varied client base, comprising sole-traders and partnerships to high net-worth individuals and top executives.

What are the most common tax planning solutions that you offer to your clients?

 Assuming the role of a trusted advisor and professional friend, our clients seek our guidance on trusts, inheritance tax and estate planning, together with the routine compliance matters such as self-assessment tax returns. Many clients utilise the expertise of our department to arrange their affairs tax efficiently whilst also maintaining their current standard of living.

We frequently act on behalf of a director both in an individual and business capacity, which affords us a unique perspective from which to advise. Such cases require us to consider a mutually beneficial tax solution for the business and the individual without incurring increased tax liability to either party.

What would you say are the specific challenges of assisting clients with tax-related matters?

 Many of our clients seek tax planning because they wish to pass their wealth to their families, however in most cases they wish to do so without comprising their current standard of living. Similarly, there are a number of clients who prepare their finances to facilitate a comfortable retirement whilst achieving the greatest tax efficiency. We ensure that tax is not the sole motivation behind our advice, it needs to be the most effective solution for that client’s individual needs.

Do you have any examples?

 A client, let’s call her Alison, was widowed in her early sixties and was worried about her inheritance tax liability because she was still earning a significant salary. Not unlike many people in the South East, Alison’s home fully utilised the inheritance tax reliefs available. Alison also had a stock market portfolio and an investment property, which was becoming cumbersome to manage. When organising her affairs, Alison was clear that she did not want to distribute her assets to her children immediately, but wanted to prepare effectively.

As a result of the planning, Alison was able to sell her rental property and decided to invest in products which gave her sufficient income to maintain her lifestyle, retained her capital and reduced her exposure to inheritance tax.

Another example is Bill, who sought advice on an exit strategy from his trading company to minimise this tax liability and whilst enabling him to access sufficient funds to spend his retirement sailing. Like many individuals, Bill had not worried about inheritance tax nor had he made sufficient provisions for his retirement. An issue for Bill, which is also faced by many other clients, is that the value of his shares in his company were exempt from inheritance tax by virtue of business property relief. However, as soon as he retired and sold his shares, Bill would have a cash asset liable to inheritance tax, in his case generating a tax liability of approximately £300,000.

Our priority for Bill was to ensure he would have enough capital to buy his boat and built this into the planning, which when completed saw Bill with a pension providing him with income for his retirement and an inheritance tax saving of £60,000.

As a thought leader, how are you ensuring that clients are engaged and informed about the development of new tax regulations or permissible strategies in the UK?

 We pride ourselves on being the go-to accountants for many businesses and individuals in Watford, and have established a reputation of excellence, integrity and innovation. Our specialists are trusted by clients to provide accurate information about tax regulations. We provide our clients with the opportunity to actively engage with this information through a calendar of seminars and events, as well as targeted communications.

Can you tell FM about your involvement in the community?

 Myers Clark has a CSR policy which includes charity fundraising events, being involved in corporate charity partner networks and establishing partnerships with local schools. This year we are introducing a new programme of work experience and summer job placements to local students in Year 10, Sixth Form and University Students.

In terms of market competition, where does Myers Clark stand nationally and what are its goals moving forward?

 Myers Clark is one of the largest independent firms of Chartered Accountants in Watford with a well-established reputation for highly skilled specialists. Our goal moving forward is to continue to provide support to individuals and businesses navigating the complex maze of tax and facilitating tax planning to ensure a profitable future.