Isaac Davison is a NZ Herald political reporter.

IRD serious about review: Labour

Todd McClay, who was Revenue Minister at the time of the review. Photo / Nick Reed
Todd McClay, who was Revenue Minister at the time of the review. Photo / Nick Reed

Tax officials formally scheduled a review of New Zealand's foreign trusts regime a month before the Prime Minister's lawyer and his associates began lobbying the Government, the Labour Party says.

Labour leader Andrew Little said the inclusion of the review on the Inland Revenue Department's action plan in November 2014 showed how serious it was about cracking down on the secretive trusts.

A month later, Mr Key's personal lawyer Ken Whitney, who specialised in foreign trusts, met then-Revenue Minister Todd McClay.

Mr McClay, who was new to the portfolio, put an end to the review five months later, saying the IRD did not have the capacity to take it on.

In Parliament yesterday, Mr Little claimed the real reason the review was dropped was the Government's closeness to the foreign trusts industry.

"It is remarkable how quick this review was scrapped," he said. "There is no way Todd McClay-" a new minister - would not have felt pressure from above."

Mr Key rejected Labour's accusations of undue influence, saying that Mr Whitney's lobbying was similar to that of any constituent.

"I did what any professional Prime Minister would do and referred [Mr Whitney and his associates] to the minister," he said.

"I don't have a sign around me that says, 'If you know me, don't talk to me'."

Green Party co-leader James Shaw called for ministers' diaries to be published to show who they were being lobbied by. In response, Mr Key said his schedule was already well-publicised.

Under questioning in Parliament, Revenue Minister Michael Woodhouse rejected any connection between Mr Whitney's lobbying and the IRD's decision to drop the review. A review would have required Inland Revenue to drop other work and would not have increased New Zealand's tax take, he said.

Earlier in the day, Mr Key said Mr Whitney had agreed that an email that used Mr Key's name to lobby Mr McClay against a crackdown on foreign trusts was "sloppily written".

The email, sent in December 2014, said: "We are concerned that there appears to be a sudden change of view by the IRD in respect of their previous support for the [foreign trusts] industry.

"I have spoken to the Prime Minister about this and he advised that the Government has no plans to change the current status of the foreign trust regime."

Mr Key said he had discussed the issue with Mr Whitney, who works at Auckland-based firm Antipodes Trust Group.

"He is absolutely confident my version of events is correct," he said. "Maybe the email was sloppily written. I was certainly aware that we weren't making any changes."

- NZ Herald

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