Glossary

Forensic accountants and family law solicitors use a defined vocabulary - case authorities, statutory tests, valuation terms and procedural rules. This glossary explains the terms that appear most often in expert reports, financial remedy orders, business valuation evidence and shareholder dispute pleadings. It is written for solicitors, barristers, and the clients who read their advice. Use the alphabet jump-links below or the search box to find a specific term, or browse by letter for related concepts. Cross-references take you to the dedicated practice page for a fuller treatment.

Al Khatib v Masry [2002]

Family Division case where the court drew adverse inferences against a husband who failed to comply with disclosure orders. Demonstrates that persistent non-disclosure can result in the court assuming undisclosed assets are substantial and making orders accordingly. See our hidden assets page.

Ancillary Relief

The former term for financial claims made in connection with divorce proceedings. Now referred to as "financial remedy" following rule changes in April 2011. See Financial Remedy.

Anglia Television v Reed [1972]

Established the alternative "reliance loss" measure of damages: where lost profits cannot be reliably calculated, the claimant may instead recover wasted expenditure incurred in reliance on the contract. Forensic accountants use this approach when profit-based damages are too speculative. See our litigation support page. See our commercial damages page for more on damages quantification.

Asset Tracing

The process of identifying, locating, and valuing assets that may have been hidden, dissipated, or transferred to defeat a financial claim. Forensic accountants use bank statement analysis, company filings, land registry searches, and lifestyle analysis to trace assets that have not been properly disclosed. See our forensic investigation services page for more detail.

Balance Sheet

A financial statement showing the assets, liabilities, and equity of a business at a specific point in time. In matrimonial proceedings, the balance sheet date chosen for valuation can significantly affect the outcome, particularly where asset values fluctuate. The court may direct that a balance sheet is prepared to a specific date. Also known as a "statement of financial position" under IFRS.

Benford's Law

A mathematical principle stating that in naturally occurring datasets, the leading digit is more likely to be small. Forensic accountants apply Benford's Law to accounting data to identify anomalies that may indicate fabrication or manipulation of figures. Deviations from the expected distribution can flag entries worthy of further investigation. See our forensic investigation services page for more detail.

But-For Test

The counterfactual test used to quantify loss in commercial disputes and professional negligence claims. The forensic accountant models what would have happened "but for" the wrongful act and compares it against actual performance. The difference is the claimant's loss. See our litigation support services page for more detail. The but-for test also applies in personal injury claims when calculating lost earnings.

BY v GC [2025] EWFC 226

Recent Family Court decision illustrating how business valuations and Single Joint Expert evidence are handled under the framework established by Standish. Relevant to practitioners considering how the new approach to matrimonial and non-matrimonial property works in practice. See also: Standish v Standish.

Cash Equivalent Value (CEV)

The value placed on a pension for the purposes of divorce. The CEV (sometimes called the Cash Equivalent Transfer Value or CETV) represents what it would cost to transfer the pension benefits to another scheme. However, the CEV may not reflect the true value of the pension, particularly for defined benefit (final salary) schemes, which is why an actuarial valuation is often required. See Pension Sharing and our matrimonial finance services page.

Capital Gains Tax (CGT)

A tax on the profit made when disposing of an asset that has increased in value. Transfers between spouses and civil partners during marriage are on a no-gain/no-loss basis. Following separation, transfers made within three tax years of the end of the tax year of separation (from April 2023 onwards) continue to benefit from this relief. After this period, CGT may apply, making the timing of asset transfers a critical consideration in financial remedy proceedings. See our tax advice for separating couples page for more detail.

Clean Break

A court order terminating all ongoing financial obligations between divorcing parties. A clean break prevents either party from making future financial claims against the other. It does not ordinarily affect child maintenance obligations. Whether a clean break is achievable depends on the parties' respective financial positions and needs. See our matrimonial finance services page for more detail.

Comparable Transactions

A business valuation method that derives value by reference to the prices paid for similar businesses in actual market transactions. The forensic accountant identifies comparable sales, adjusts for differences in size, profitability, and risk, and applies the resulting multiples to the subject business. Also referred to as the "market approach."

Confiscation Order

A court order under the Proceeds of Crime Act 2002 requiring a defendant to pay a sum equal to their benefit from criminal conduct. The court determines two figures: the benefit figure (total benefit from crime) and the available amount (realisable assets). If the defendant can't pay, a default prison sentence applies. See our criminal defence forensic accounting page for more detail.

CPR Part 35

Part 35 of the Civil Procedure Rules governs expert evidence in civil proceedings in England and Wales. It sets out the expert's overriding duty to the court, requirements for expert reports, the court's power to restrict expert evidence, and provisions for single joint experts. An expert's report must comply with Practice Direction 35 and include a statement of truth. The expert's duty to the court overrides any obligation to the instructing party. See Expert Witness and our expert witness services page.

Daniels v Walker [2000] EWCA Civ 508

Court of Appeal confirmed that a party dissatisfied with a Single Joint Expert's conclusions may apply for permission to instruct their own expert, though the court retains discretion over whether to allow it. Key authority on challenging SJE reports. See our expert witness page.

Discounted Cash Flow (DCF)

A valuation method that estimates the value of a business based on its projected future cash flows, discounted back to present value using an appropriate discount rate (typically the weighted average cost of capital). DCF is particularly useful for businesses with predictable future earnings and is commonly used alongside earnings-based methods. The choice of discount rate and growth assumptions can materially affect the valuation outcome. See our business valuation services page for more detail.

Disclosure

The obligation on parties in financial remedy proceedings to provide full and frank disclosure of their financial circumstances. In family proceedings, each party completes a Form E setting out their assets, income, liabilities, and needs. Failure to provide proper disclosure can result in costs orders, adverse inferences, or the setting aside of a financial order. Forensic accountants are often instructed where there are concerns that disclosure is incomplete or inaccurate. See our Form E guide page for more detail. Our divorce forensic accounting guide explains how we review disclosure for completeness.

EBITDA

Earnings Before Interest, Tax, Depreciation, and Amortisation. A commonly used measure of a business's operating profitability that strips out the effects of financing decisions, tax regimes, and non-cash charges. EBITDA is frequently used as the basis for business valuations, with an appropriate multiple applied to derive enterprise value. Adjustments are typically made for exceptional items, owner's remuneration above market rate, and non-recurring costs to arrive at a "maintainable" or "normalised" EBITDA. See our business valuation services page for more detail.

Ebrahimi v Westbourne Galleries [1973]

Established the "quasi-partnership" doctrine: where a company was founded on personal relationships and mutual trust, the court may order a buyout at pro rata value without applying a minority discount. Foundational authority for forensic accountant valuations in unfair prejudice petitions. See our shareholder disputes page.

Enterprise Value

The total value of a business, including both equity and debt. Enterprise value equals equity value plus net debt. When a forensic accountant values a business using an EBITDA multiple, the result is typically enterprise value. To arrive at the equity value (relevant to the business owner's interest in financial remedy proceedings), net debt is deducted from enterprise value. See our business valuation services page for more detail.

Expert Witness

A person with specialised knowledge who provides an independent opinion to the court on matters within their expertise. In forensic accounting, expert witnesses prepare reports on business valuations, income assessments, asset tracing, and financial losses. The expert's overriding duty is to the court, not to the party who instructs them. Expert evidence is governed by CPR Part 35 in civil proceedings and FPR Part 25 in family proceedings. For more, see our expert witness services page.

Fair Value

The price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. Defined by IFRS 13, fair value is a market-based measurement, not an entity-specific measurement. In forensic accounting, fair value may differ from other valuation bases such as value to the holder or forced sale value. See our shareholder dispute services page for more detail.

FCA v Arch Insurance [2021] UKSC 1

The FCA test case that reshaped business interruption insurance claims in the UK. Arising from COVID-19, it established that the counterfactual analysis must assume the insured peril did not happen. Overruled Orient Express Hotels and significantly changed how BI losses are calculated by forensic accountants. See our business interruption page.

Financial Remedy

The process by which the court determines the financial arrangements between parties on divorce or dissolution. The court can make orders in respect of capital, property, pensions, and income (maintenance). The court considers the factors set out in Section 25 of the Matrimonial Causes Act 1973, with first consideration given to the welfare of any minor children. Financial remedy was previously known as ancillary relief. For more, see our matrimonial finance services page. For a practical guide on forensic input in these cases, see forensic accountants in divorce.

Form E

The standard financial statement used in financial remedy proceedings. Each party must complete a Form E setting out their income, assets, liabilities, pensions, and financial needs. The form requires extensive supporting documentation including bank statements, valuations, and tax returns. The Form E is a sworn document, and providing false or misleading information can have serious consequences including costs sanctions and committal proceedings. See our Form E guide page for more detail.

FPR Part 25

Part 25 of the Family Procedure Rules governs the instruction of experts in family proceedings. The court's permission is required before expert evidence can be put before the court. The court will only give permission where the expert evidence is necessary to assist the court to resolve the proceedings and the information cannot be provided by a party. FPR Part 25 sets out the duties of experts, the content of expert reports, and provisions for questions to experts. See our expert witness services page for more detail.

Freezing Order

An injunction preventing a party from disposing of or dealing with their assets, typically granted under CPR Part 25.1. In forensic accounting cases, freezing orders are sought to prevent dissipation of assets pending trial. The applicant must show a good arguable case and a real risk of asset dissipation. Also called a freezing injunction. See our forensic investigation services page for more detail.

Going Concern

The assumption that a business will continue to operate for the foreseeable future and is not at risk of ceasing to trade. Valuations prepared on a going concern basis assume the business will continue trading and generating profits. Where there are doubts about going concern (for example, in insolvency situations), valuations may need to be prepared on a break-up or liquidation basis, which typically produces a significantly lower value. See our forensic insolvency services page for more detail.

Gohil v Gohil [2015] UKSC 61

Heard alongside Sharland v Sharland, the Supreme Court confirmed that financial orders obtained through material non-disclosure can be set aside and the case reheard. Together with Sharland, these are the twin pillars of non-disclosure case law in financial remedy proceedings. See our Form E guide.

Goodwill

An intangible asset representing the excess of the purchase price of a business over the fair value of its identifiable net assets. In forensic accounting, goodwill is often split between "personal goodwill" (attributable to the skills and reputation of an individual) and "commercial goodwill" (attributable to the business itself). This distinction is particularly relevant in matrimonial proceedings involving professional practices, as personal goodwill may not be realisable on sale. See our business valuation services page for more detail.

H v H [2008]

Addressed whether minority or majority discounts should apply in business valuations for financial remedy proceedings, specifically where the majority shareholder-spouse retains control and the shares are not actually being sold on the open market. See our business valuations page.

Hot-Tubbing

An informal term for concurrent expert evidence, where experts from both sides give evidence at the same time, discussing areas of agreement and disagreement directly with each other and the judge. Hot-tubbing can be an efficient way of identifying the real issues between experts and is increasingly used in family proceedings involving valuations and other financial matters. See our expert witness services page for more detail.

Jones v Jones [2011] EWCA Civ 41

Court of Appeal held that latent capital gains tax within a business may justify an unequal division of the business asset in financial remedy proceedings. The forensic accountant should quantify the CGT that would arise on a hypothetical disposal when valuing business interests. See our business valuations page.

Kennedy v Cordia [2016] UKSC 6

Supreme Court confirmed that an expert witness must have relevant expertise in the specific area they are giving evidence on, not merely general professional qualifications. Sets the admissibility standard for expert evidence. See our expert witness page.

Lifestyle Analysis

A forensic accounting technique used to assess whether an individual's declared income is consistent with their lifestyle and spending patterns. Where expenditure exceeds declared income, it may indicate undisclosed income or assets. Lifestyle analysis involves examining bank statements, credit card records, property holdings, vehicle ownership, and other indicators of wealth. See our hidden assets in divorce page for more detail.

Livesey v Jenkins [1985] AC 424

Established the foundational duty of full and frank disclosure in financial remedy proceedings. Both parties must lay their financial cards on the table. Reinforced repeatedly in subsequent case law including Sharland and Gohil. See our hidden assets page.

Loss of Profits

A claim for the profits a business or individual would have earned but for the defendant's actions. Quantifying loss of profits typically involves establishing the "but for" position (what would have happened absent the wrongdoing) and comparing it with actual performance. Forensic accountants use financial projections, industry data, and comparable businesses to quantify losses. The standard of proof is the balance of probabilities. See our litigation support services page for more detail. See our loss of profits claims page for detail on how we quantify these losses for solicitors.

Maintainable Earnings

The level of earnings that a business can be expected to sustain going forward. Forensic accountants adjust reported earnings by removing exceptional or non-recurring items, normalising owner's remuneration to market rate, and correcting for any other factors that may distort the true underlying profitability of the business. Maintainable earnings form the basis for earnings-based valuations. Also referred to as "normalised earnings." See our business valuation services page for more detail.

Manchester Building Society v Grant Thornton [2021] UKSC 20

Recalibrated the "scope of duty" test from SAAMCO for professional negligence claims. The defendant is liable only for losses falling within the scope of the duty they assumed, not all consequential losses. Essential for forensic accountants quantifying losses in negligence cases. See our litigation support page.

Matrimonial Asset

An asset generated by the joint efforts of the parties during the marriage. Matrimonial assets are typically subject to the sharing principle (equal division) on divorce. Assets acquired before the marriage, inherited, or received as gifts ("non-matrimonial assets") may be treated differently, although they can still be taken into account where needs require it. The classification of assets as matrimonial or non-matrimonial is frequently a contentious issue requiring forensic accounting analysis. See our matrimonial finance services page for more detail.

Miller v Miller; McFarlane v McFarlane [2006] UKHL 24

Two conjoined House of Lords cases. Miller identified the "double-counting" risk: if a business is valued by capitalising future earnings, those same earnings should not also form the basis of a periodical payments order. McFarlane established that the sharing principle applies only to matrimonial property. Critical for forensic accountants choosing valuation methodology. See our matrimonial finance page.

Minority Discount

A reduction applied to the value of a shareholding that represents less than a controlling interest in a business. A minority shareholder typically cannot direct the company's strategy, dividend policy, or sale. The appropriate level of discount depends on the rights attaching to the shares, any shareholder agreement, and the specific circumstances. Minority discounts in matrimonial proceedings are approached with caution by the courts. See our shareholder dispute services page for more detail.

Misfeasance

A claim under s.212 Insolvency Act 1986 against directors, liquidators, or officers of a company for breach of fiduciary duty, negligence, or misapplication of company property. Forensic accountants quantify the loss to the company resulting from the misfeasant conduct. See our forensic insolvency services page for more detail.

Net Asset Value (NAV)

A valuation method that values a business by reference to the fair value of its net assets (total assets minus total liabilities). NAV is most commonly used for asset-intensive businesses, property holding companies, and businesses being valued on a break-up basis. For trading businesses, NAV may significantly understate value where there is unrecorded goodwill. See our business valuation services page for more detail.

O'Neill v Phillips [1999]

House of Lords confirmed that in a quasi-partnership company, a share purchase order under s.994 Companies Act 2006 (then s.459 CA 1985) should normally be at pro rata value without a minority discount. Defines how unfair prejudice valuations are approached. See our shareholder disputes page.

Orient Express Hotels v Assicurazioni Generali [2010]

Previously allowed insurers to argue that the business would have suffered the same loss anyway due to the wider catastrophic event. Overruled by FCA v Arch Insurance [2021], significantly changing how business interruption losses are calculated. See also: FCA v Arch Insurance. See our business interruption claims page.

Party-Appointed Expert

An expert witness instructed by one party to a dispute, as distinct from a Single Joint Expert. The party-appointed expert's duty remains to the court under CPR Part 35.3, but they are instructed and paid by one side. Where both parties have their own expert, the court typically directs a joint expert meeting under CPR Part 35.12. See also: Single Joint Expert and our expert witness services page.

Price/Earnings Ratio (P/E Ratio)

A valuation multiple calculated by dividing the price per share by the earnings per share. In forensic accounting, a P/E ratio is used to value a business by multiplying its maintainable earnings by an appropriate P/E multiple. The choice of multiple depends on factors including the size, profitability, growth prospects, and risk profile of the business, as well as multiples observed in comparable transactions. See our business valuation services page for more detail.

Pension Sharing

A court order transferring a percentage of one party's pension benefits to the other party on divorce or dissolution. The recipient receives a pension credit, which can be held within the existing scheme (internal transfer) or transferred to a new arrangement (external transfer). Pension sharing is the most common method of dividing pension benefits on divorce. The percentage to be shared is determined by reference to the Cash Equivalent Value, although an actuarial valuation may be needed to achieve a fair outcome. For more, see our tax advice for separating couples page.

POCA

The Proceeds of Crime Act 2002. The principal UK legislation for recovering the proceeds of criminal conduct through confiscation, civil recovery, and cash forfeiture. Forensic accountants are frequently instructed to analyse financial evidence in POCA proceedings, particularly in calculating the benefit figure and identifying realisable assets. See also: Confiscation Order and our criminal defence forensic accounting page.

Principal Private Residence Relief

A capital gains tax exemption that applies to the disposal of a property used as the taxpayer's main residence. On divorce, the extended no-gain/no-loss window under Finance Act 2023 means transfers between separating spouses are relieved for up to 3 years after separation. PPR planning is critical in financial remedy cases where property transfers form part of the settlement. See also: Capital Gains Tax and our tax advice for separating couples page.

Preference

A transaction under s.239 Insolvency Act 1986 where a company puts a creditor in a better position than they would have been in an insolvent liquidation. To be challenged, the preference must have occurred in the 6 months before insolvency (or 2 years if the creditor is a connected person), and the company must have been influenced by a desire to prefer that creditor. See our forensic insolvency services page for more detail.

Prest v Petrodel Resources [2013] UKSC 34

Supreme Court addressed the limits of piercing the corporate veil in matrimonial proceedings. Held that property held by a company could be treated as belonging to the spouse if there was improper transfer. Reinforced the court's willingness to draw adverse inferences where a party fails to give proper disclosure. See our hidden assets page.

Professional Negligence

A claim against a professional (accountant, solicitor, financial adviser, surveyor) for failing to exercise the skill and care expected of a reasonably competent member of their profession. The forensic accountant's role is to quantify the loss: the difference between the claimant's actual position and where they would have been had the professional not been negligent. See also: But-For Test and our litigation support services page.

Profinance Trust SA v Gladstone [2002]

Confirmed broad judicial discretion on the valuation date in unfair prejudice petitions. The court normally uses the date of the buy-out order unless this would be unfair to one party. Important for forensic accountants determining which date to value shares at in shareholder disputes. See our shareholder disputes page.

SAAMCO (South Australia Asset Management v York Montague) [1997]

The original "scope of duty" authority for professional negligence claims, distinguishing between "advice" and "information" cases. Recalibrated by Manchester Building Society v Grant Thornton [2021]. Forensic accountants must understand this framework when quantifying losses in negligence claims. See also: Manchester BS v Grant Thornton. See our professional negligence claims page.

Stamp Duty Land Tax (SDLT)

A tax payable on land and property transactions in England and Northern Ireland. Transfers of property between spouses or civil partners pursuant to a court order on divorce or dissolution are exempt from SDLT. This exemption applies regardless of the value of the property. However, SDLT may be payable on transfers that are not made pursuant to a court order, making the structure of any financial settlement an important consideration. See our tax advice for separating couples page for more detail.

Section 25 Factors

The factors set out in Section 25 of the Matrimonial Causes Act 1973 that the court must consider when determining financial remedy applications. These include: the income and earning capacity of each party; the financial needs and obligations of each party; the standard of living enjoyed during the marriage; the age of each party and the duration of the marriage; any physical or mental disability; the contributions made by each party; and any other relevant circumstances. First consideration is given to the welfare of any minor child. See our matrimonial finance services page for more detail.

Shadow Expert

An expert instructed by one party to review and comment upon the report of the single joint expert or the other party's expert. A shadow expert (also called an "advisory expert") does not give evidence directly to the court but assists the instructing party in understanding the expert evidence, formulating questions for the SJE, and preparing for cross-examination. The costs of a shadow expert may not be recoverable. See our expert witness services page for more detail.

Sharland v Sharland [2015] UKSC 60

Supreme Court confirmed that a financial order obtained through fraudulent non-disclosure can be set aside. The husband had deliberately concealed the true value of his business by failing to disclose an imminent IPO. Crucial authority on the consequences of dishonest Form E disclosure. See our Form E guide.

Single Joint Expert (SJE)

An expert instructed jointly by both parties (or appointed by the court) to provide an independent opinion. The SJE owes a duty to the court and must remain impartial. In financial remedy proceedings, SJEs are commonly appointed to value businesses, pensions, and other assets. The use of a single joint expert is encouraged by the courts as it reduces costs and promotes a collaborative approach. The SJE's report is directed to the court, not to either party. See our expert witness services page for more detail.

Standish v Standish [2024] EWCA Civ 567

Described as the most significant family finance judgment in almost two decades. Established that the sharing principle applies only to matrimonial property, and pre-marital wealth is more firmly protected than previously assumed. Fundamentally changes how forensic accountants approach business valuations in divorce where the business predates the marriage. See our detailed analysis.

Transaction at an Undervalue

A transaction under s.238 Insolvency Act 1986 where a company makes a gift or enters into a transaction for significantly less than the value it provides. The transaction must have occurred in the 2 years before insolvency. Forensic accountants assess whether adequate consideration was given by comparing the value received against the value provided. See our forensic insolvency services page for more detail.

Unfair Prejudice

A claim under s.994 Companies Act 2006 by a shareholder that the company's affairs have been conducted in a manner unfairly prejudicial to their interests. Common complaints include exclusion from management, excessive director remuneration, and diversion of business opportunities. The usual remedy is a buy-out order, and forensic accountants value the petitioner's shares - often with a dispute over whether a minority discount should apply. See also: Minority Discount and our shareholder dispute services page.

Valuation Date

The date at which a business or asset is valued. The choice of valuation date can materially affect the outcome, particularly where values have fluctuated. In matrimonial proceedings, there is no fixed rule as to the valuation date; the court has discretion to select the most appropriate date, which may be the date of separation, the date of the hearing, or another date depending on the circumstances. The forensic accountant may be asked to value a business at more than one date to assist the court. See our business valuation services page for more detail.

Weighted Average Cost of Capital (WACC)

The blended cost of a company's debt and equity financing, weighted by their respective proportions in the capital structure. WACC is commonly used as the discount rate in discounted cash flow valuations. A higher WACC reflects greater risk and produces a lower valuation. The calculation of WACC involves subjective judgments about the cost of equity (often derived using the Capital Asset Pricing Model) and is frequently a point of disagreement between experts. See our business valuation services page for more detail.

Waggott v Waggott [2018] EWCA Civ 727

Court of Appeal confirmed that post-separation earning capacity is not a matrimonial asset to be shared under the sharing principle. Important for valuing businesses where significant growth occurred after the parties separated. See our matrimonial finance page.

Wells v Wells

Referenced in the context of "Wells sharing" - a method of dividing pension benefits on divorce where, instead of a pension sharing order, the pension-holding spouse retains the pension and compensates the other spouse with a larger share of other assets. Commonly used where a clean break is preferred. See our tax advisory page.

White v White [2000] UKHL 54

Established the "yardstick of equality" in financial remedy proceedings - there should be no discrimination between the breadwinner and the homemaker when dividing matrimonial assets. Foundational authority for how assets (including business interests) are divided on divorce. See our matrimonial finance page.

Wrongful Trading

A claim under s.214 Insolvency Act 1986 against a director who allowed a company to continue trading when they knew or ought to have concluded there was no reasonable prospect of avoiding insolvent liquidation. The forensic accountant's role is typically to identify the date from which the director should have known, and to quantify the increase in net deficiency from that date to the date trading actually ceased. See our forensic insolvency services page for more detail.