EM3652 - Recalculating Profits: Personal and Private Expenditure: Approach

Each case will be different, and every enquiry officer’s approach will vary somewhat. Nevertheless, you have a common aim to establish as many facts as possible from the taxpayer and to arrive at reasonable estimates where these are necessary. The amount of work done will depend upon the size and importance of the case and the degree of accuracy required.

You should get a general impression of the taxpayer's standard of living and spending habits. Then go on to establish the amounts actually spent on specific items and the sources of the payments. In this way you are building up a total of money which has been spent and ascertaining all the sources of funds, so that you can discover what was available for spending.

You must leave a clear explanation in the papers of how you verified the figure for personal and private expenditure showing clearly which items have been estimated and which established. This will assist any successor or reviewer.