How Do Financial Disclosure Rules Work in UK Divorce Cases? | KLR Solicitors

Article summary:

• ‘Full and frank’ financial disclosure is a legal obligation in divorce proceedings in England and Wales, and both parties must comply fully and honestly
• The main disclosure document is Form E, which requires full details of assets, income, liabilities, and financial needs
• Hiding, undervaluing, or failing to disclose assets can have serious consequences, including the court setting aside a financial order years after it was made
• Disclosure is an ongoing duty; if your financial circumstances change significantly during proceedings, you are required to update the information you have provided
• Instructing a solicitor early on in your divorce will ensure your disclosure is accurate, complete, and properly presented, which can reduce delays and legal costs

Before a financial remedy proceedings agreement can be reached or any court order made, both parties must provide a full and accurate picture of their financial position following divorce. Without that, the court cannot properly assess what a fair outcome looks like, and any agreement reached without proper disclosure may be open to challenge later. Understanding what the rules actually require, and why they matter, puts you in a much stronger position to manage your case sensibly and avoid costly mistakes.

What is the duty of disclosure?

The legal obligation to disclose finances in divorce financial remedy proceedings arises from both the court’s procedural rules and well-established case law. The Family Procedure Rules 2010 set out the process, and the courts have long held that full and frank disclosure is essential in family financial proceedings.

The leading principle was stated clearly in the case of Livesey v Jenkins [1985] AC 424, in which the House of Lords confirmed that both parties owe a duty of full and frank disclosure to the court, and that this duty is not owed simply to the other spouse but to the court itself. This means the obligation cannot be ignored by agreement between the parties. Even if your spouse says they are not interested in seeing your financial details, the court still requires both of you to comply.

More recently, the Supreme Court’s decision in Sharland v Sharland [2015] UKSC 60 reinforced the point further. In this case, a financial order was set aside years after it had been made because the husband had fraudulently misrepresented the value of his business. The court held that a material non-disclosure will entitle the other party to have the order set aside, even where considerable time has passed.

What is Form E? 

In most cases, financial disclosure is provided through a document known as Form E. This is a detailed, standardised form that each party must complete and exchange simultaneously. It runs to many pages and covers every aspect of a person’s financial life.

Form E requires details of:

• All property owned, including any property held jointly or in the name of a company or trust
• Bank and savings accounts, including any accounts that have been closed in the past twelve months
• Investments, shares, and ISAs
• Business interests, including any role as a director, shareholder, or self-employed person
• Pensions, including workplace pensions, personal pensions, and the State Pension
• Income, including salary, bonuses, dividends, rental income, and any other regular receipts
• Liabilities such as mortgages, loans, credit cards, and hire purchase agreements
• Financial needs and obligations, including housing costs and any commitments for children

Bank statements, pension valuations, mortgage statements, payslips, tax returns, and business accounts all typically need to be attached. The form must be signed with a statement of truth, which means you are confirming under penalty of perjury that the information is accurate and complete to the best of your knowledge.

What must happen before you apply to the court?

Not every financial disclosure takes place through formal court proceedings. Many couples resolve financial matters through negotiation between solicitors or through mediation, and in those situations, disclosure often takes place on a voluntary basis using Form E or a similar document.

The important point is that whether disclosure happens in court or outside it, the same standard of honesty applies. If you reach a financial agreement through mediation or direct negotiation and that agreement is later submitted to the court as a consent order, the court will still scrutinise whether it is fair. A consent order made on the basis of inaccurate or incomplete disclosure can be set aside, leaving both parties facing further proceedings and additional expense.

What happens if disclosure is inadequate or dishonest?

The consequences of failing to disclose properly are serious. The court has a range of tools available to it when it suspects that a party has been less than candid. Questionnaires and further disclosure requests are the starting point. Once Form E documents are exchanged, each party can raise detailed written questions about the other’s disclosure. These must be answered under the continuing duty of candour.

If the court remains unsatisfied, it may order:

• Third-party disclosure, requiring banks, employers, or HMRC to provide financial information directly to the court
• A forensic accountant to investigate business interests or complex assets
• An adverse inference, meaning the court assumes the undisclosed assets exist and factors them into its award

In the most serious cases, deliberately hiding assets amounts to contempt of court. The court can also make costs orders against the non-disclosing party, meaning they pay a proportion of the other side’s legal costs as a consequence of their conduct. The long-term risk is perhaps the most significant. As the Sharland case demonstrated, there is no ‘safe harbour’ once a final order is made if that order was based on fraudulent or material non-disclosure. The other party can return to court and ask for the order to be set aside and replaced with a fresh one that reflects an accurate picture of the finances.

Disclosure of business assets

Business interests present some of the most complex disclosure issues in divorce cases. The value of a business is not always straightforward. Net book value, earnings-based valuations, and asset-based approaches can produce very different figures, and the choice of methodology can have a significant impact on the outcome. A party with a business interest will typically need to produce at least three years of trading accounts, current management accounts, and a director’s loan account. In contentious cases, the court may appoint a single joint expert, an independent accountant instructed by both parties, to provide a valuation.

In our experience at KLR Solicitors, business owner cases are where disclosure disputes are most likely to arise and where early, comprehensive advice makes the biggest difference. Getting the documentation in order before proceedings begin, and understanding how your business will be valued, allows you to engage with the process from a position of clarity rather than reaction.

Disclosure of pension details

Each party must obtain a Cash Equivalent Transfer Value (CETV) from every pension scheme they hold and include it in their Form E. A CETV is the pension provider’s estimate of the current value of the benefits accrued. It is important to note that CETVs can sometimes understate the true value of a pension, particularly in the case of defined benefit schemes such as final salary pensions. In those cases, a pension actuary may need to be instructed to provide an accurate valuation. Failure to disclose a pension properly, or to understate its value, is treated as seriously as any other non-disclosure and can result in the same consequences.

The ongoing nature of the duty to disclose

It is important to bear in mind that disclosure is not a one-off exercise. The duty to provide full and frank financial information continues throughout proceedings. If your circumstances change significantly after you have filed your Form E, you are required to update your disclosure. This includes changes such as a significant pay rise or bonus, the sale of a property or business, or the receipt of an inheritance. Failing to update disclosure when circumstances change is treated as a breach of the ongoing duty and can have the same adverse consequences as an original failure to disclose.

Practical steps for managing your disclosure

There are a number of practical steps that can help you approach disclosure sensibly and efficiently:

• Start gathering documents early - Bank statements, pension valuations, mortgage statements, and business accounts can take time to obtain, and delays in producing them will slow down the proceedings. If you have multiple accounts or a complex financial picture, create a schedule of everything you hold before you start completing Form E. Be thorough rather than selective. The temptation to omit items that seem insignificant or unflattering can be strong, but the consequences of partial disclosure significantly outweigh any short-term advantage. If you are unsure whether something needs to be included, the answer is almost always to include it.
• Keep your supporting documents organised - The court and the other party’s solicitor will scrutinise the documents you provide. Gaps in bank statements, unaccounted transactions, or inconsistencies between accounts and the values stated in your form will prompt questions that slow down the process and raise suspicion.
• Seek advice on complex assets - Property valuations, business interests, pensions, and trust assets all benefit from specialist input. Understanding how these assets will be assessed before you disclose them helps you present the information accurately and avoid disputes that add cost and delay.

We find that clients who come to us having already gathered their financial documents and given some thought to what they hold almost always find the process more manageable. Taking a structured approach from the outset reduces both anxiety and legal fees.

Final words

Financial disclosure in divorce proceedings should always be handled honestly and completely, even if you are concerned that your ex-partner not follow suit. Remember, if they do not provide a full and frank picture of their financial position, the court will take a very dim view of this and reduce their portion of the marital pot. Specialist legal advice remains the most reliable way to ensure your disclosure is complete, accurate, and properly supported by evidence. If you have questions about your financial disclosure obligations or any aspect of your divorce settlement, our team at KLR Solicitors is here to help.