Add-Backs & Financial Reconstruction - Family Court Accountant
Identification of personal expenditure run through the business and financial reconstruction of the matrimonial pot.
Business-owning spouses sometimes fund personal lifestyle through company accounts. Add-backs identify expenditure that should be treated as personal benefit and added back to available capital for distribution.
Financial reconstruction presents an adjusted picture of resources after add-backs, related-party transactions, and assessment of whether business debts are commercially genuine.
Methodology
| Step | Detail |
|---|---|
| Business account review | Analyse company expenditure for personal benefit items |
| Add-back calculation | Quantify expenditure to be added back to available capital |
| Debt analysis | Assess commercial reality of business loans and liabilities |
| Reconstruction report | Present adjusted financial position for the court |
Frequently asked questions
What are "add-backs" in family proceedings?
An add-back is expenditure incurred by a business-owning spouse that is treated as personal benefit and therefore added back to the matrimonial pot for distribution. Common examples include personal cars run through the business, holidays expensed to the company, domestic expenses paid by the business, and related-party transactions that benefit the owner.
How is a business valued in divorce proceedings?
Add-backs analysis often runs alongside business valuation. The court needs both the headline value of the business interest and an adjusted view of capital that has been diverted through the company for personal use.
What is expert witness standards and how does it apply?
Part 25 of the Family Procedure Rules 2010 governs expert appointment in family proceedings. Add-backs and reconstruction reports must comply with expert witness standards Practice Direction and include a statement of truth.
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