June 2010

Form E is the financial statement on each party’s position prepared in financial proceedings arising out of divorce or judicial separation. It can also be used as a guide to the format for voluntary financial disclosure before the issue of proceedings.

Although Form E is complex and needs to be completed with care, it is important that disproportionate costs are not incurred in its preparation. In particular, following the submission of each party’s Form E with supporting documents, significant time costs may be incurred in preparing questionnaires to be exchanged subsequently to obtain clarification and further information. This newsletter highlights the key types of anomaly which can be identified in reviewing a client’s draft Form E or in reviewing the other party’s Form E before time is spent in reviewing the supporting documents.

An Overview

The primary financial data in Form E relates to the assets, liabilities, income and income needs of the party. In this context, it is important to ensure that there are no inadvertent or deliberate understatements of assets and income or overstatements of liabilities and income needs given that inaccuracies may arise because of reliance on outdated information or missing documentation. 

An overview of Form E can be undertaken systematically to ensure that:

  • there is consistency between “related” sections such as those on assets and income, e.g. whether adequate account is taken of dividends arising from shares noted in Form E;
  • references to “one-off” or exceptional data are not intended to be misleading, e.g. “temporary” decreases in income;
  • there is consistency with primary supporting information, e.g. Form P60;
  • comparable information is provided on a consistent basis, e.g. bank balances for various accounts should be provided for around the same dates; and
  • valuation information, whether relating to property, shares or businesses, is based on the most recent available information.

Examples of Inaccuracies

Examples of some key inaccuracies identifiable in a completed Form E include the following:

Understated Assets

  • Pension rights relating to personal plans, previous employment, SERPS and S2P
  • Assigned insurance policies or misclassified, e.g. term/endowment
  • Cash arising from recent asset depletions, e.g. surrendered policies
  • Amounts owed by owner-managed business
  • Outdated property valuations
  • “Deferred” assets, e.g. share options
  • Bank account data covering various dates, allowing unrecognised transfers
  • Trading business valuations based on net assets or outdated financial data

Overstated Liabilities

  • Recent increased borrowings unmatched by cash requirements
  • Loans from friends/family not supported by audit trail/documents
  • Estimated CGT based on inadequate account of reliefs or double-counted
  • Tax liabilities on future income, e.g. payments on account made to HMRC

Understated Income

  • Future income from unoccupied properties or through rent reviews
  • Omission of income received by way of directors’ current accounts
  • Drawings recognised in lieu of salary
  • Omission of deferred bonuses
  • Omission of non-cash benefits
  • Income based on outdated documents

Other Anomalies

  • High interest income but low bank balances
  • Various shareholdings disclosed but omission of dividend income
  • Insurance policy premiums but omission of insurance policy/insured assets
  • Payments to stockbrokers but omission of shareholdings


A careful scrutiny of a draft Form E prepared by a client can enhance the credibility of the final document disclosed to the other party. Conversely, a critical appraisal of the other party’s Form E can result in the receipt of comprehensive responses at an early stage. In either scenario, forensic accounting assistance may help legal advisers to achieve a cost-effective approach.

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The information contained in our Newsletters is provided as general information only. It does not constitute professional advice and should not be relied on or treated as a substitute for specific advice relevant to particular circumstances. In addition, since the Newsletters were published in recent years, the information contained in them may not be applicable at the current time.