As with corporate finance, most of our forensic work is for existing clients or our extended professional network, independent financial advisors, lawyers and other accountants. Not all the work relates to tax matters but most clients come to us with tax in mind.
Two recent cases illustrate our forensic approach, one specifically to do with tax and the other driven by tax complications.
The first case involved a partnership being acquired by a limited company and the calculation of terminal loss relief including capital allowances and overlap relief. The problems were complicated by arguments surrounding the deduction of certain expenses for tax purposes. Tax payments had been late and there were problems allocating what cash to which period. Delays responding to the Revenue had exacerbated the difficulties and the case was in stalemate. The inspector was threatening to issue determinations.
It was all a bit of a mess, so it took a while to establish that technically the client had a strong case. From HMRC’s perspective the client’s responses had been piecemeal and incomplete so it might be argued the client hadn’t helped themselves. That said, appointing an independent expert was a good move because we were able immediately to establish a rapport with the inspector leading ultimately to a positive conclusion. The value we added was specific. We were able to explain to the Inspector why the client’s claims should be allowed.
In the second case our client was a partner in a firm specializing in corporate finance. The partnership agreement was arcane both as a working arrangement and more so on retirement. That was generally the case but what complicated matters were the compensation arrangements around deferred fee income. Essentially the deferred income was taxable but the corresponding deferred compensation wasn’t allowable. The sums involved were significant and the politics Venetian.
DSC Metropolitan’s team took a methodical approach which helped reduce an element of (natural enough) human tension. When the big four are being brandished an exiting partner might feel intellectually bullied into accepting less than they’re due. We worked with our client and his lawyers to achieve the right solution amicably.
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“We were able to explain to the inspector why the client’s claims should be allowed”