Form E Financial blunder
On Friday it was announced that Nicola Matheson-Durrant, a McKenzie Friend with the Family Law Clinic based in Berkshire, spotted a software glitch on Tuesday with the Ministry of Justice Financial Statement, known as Form E. Matheson-Durrant reported the fault to the Ministry of Justice who have now corrected the software. It has been reported that this could have wide-reaching ramifications for thousands of couples resulting in unfair settlements. An urgent investigation has ensued by the Ministry of Justice who will contact those people who are affected.
What is a Form E?
A Financial Statement known as Form E is utilised by parties on divorce as a way of evidencing their respective financial positions and other relevant circumstances, accompanied by documentary evidence. This is often referred to as engaging in “full and frank disclosure”.
What’s the glitch?
The glitch is with section 2.20 of the Form E which provides a summary of each party’s capital taken from Parts 1 to 5 of the Form E as set out below.
- Part 1: Property (land and buildings) and personal assets
- Part 2: Liabilities and Capital Gains Tax
- Part 3: Business assets and directorships
- Part 4: Pensions and Pension Protection Fund (PPF) Compensation
- Part 5: Other assets
The problem is the ‘total value of assets’ figure at the bottom of the table fails to deduct the liabilities, resulting in an overinflated figure for each party’s capital assets.
So who could be affected?
Many firms including Gorvins do not use the Ministry of Justice website for Court forms and prefer to use programmes such as Laserform or online legal databases like LexisNexis. Only those who have used the Financial Statement from the Ministry of Justice website between April 2014 and 15 December 2015 will be affected. It is thought that 20,000 forms were downloaded during that time. The Ministry of Justice are reviewing all cases during this period and are contacting anyone who they believe will be affected. If you are concerned you can contact the Ministry of Justice via the following email address: formE@hmcts.gsi.gov.uk.
The reality of the situation is that for most cases this glitch will not have resulted in unfair settlements. Solicitors and the Courts utilise Forms E to illicit information about both parties’ financial circumstances, namely their assets, income, liabilities and pensions and it is these figures, accompanied by the documentary evidence, which are taken into account when considering settlement proposals, not the figures on the summary page. Put simply, if the parties’ have liabilities they will appear in sections 2.9 (liabilities) and 2.10 (Capital Gains Tax) of the Form E and a Solicitor or Court is not going to gloss over these simply because the summary page at paragraph 2.20 has failed to deduct them from the capital assets – they will still be taken into account as part of any financial settlement.