Loss of earnings

Loss of earnings

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Hi I've been asked to help client with loe claim, have 3 years Accts, accident happened year 2.

Thinking of setting out actual income-expenses all 3 years, showing difference in net as loss. With a note that other things could have affected trade except accident etc.

Is this reasonable. What do you recommend. Not prepared one before. Many thanks for your input.

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the sea otter
By memyself-eye
19th Apr 2016 15:09

If you have 3 years accounts

why not just go with them. I would not have thought it your job to take part in the negotiations about what was (theoretically) 'lost' after the accident. That's a lawyers role.

Thanks (1)
By Duggimon
19th Apr 2016 15:21

It would depend on how far reaching the effects of the accident were. When preparing letters for clients who are called up for jury duty or some equivalent we work out a daily rate based on their variable income less their variable expenses and multiply that by the number of days missed. If the period your client was off work for was relatively short and there were no lingering after effects then this is the approach I'd take.

If however the effects were more far reaching then I'd be looking at engaging some sort of specialist solicitor to ensure all relevant criteria are included in the claim.

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By johngroganjga
21st Apr 2016 16:56

The above posts betray a lack of understanding of what must be happening here.

Advice to get a solicitor to calculate the loss of earnings is likely to be about as wide of the mark as it is possible to be, because it must be a solicitor who is asking the OP to calculate the claimant's loss.

But admittedly i am making an assumption there.

So, to the OP:

If the client is asking you to calculate the quantum of his loss of earnings without having consulted a solicitor on the merits of his claim, you should advise him to consult a solicitor without further delay, and do nothing in the meantime.

But if, as I suspect, the solicitor is already leading the process and has asked you (either directly or via the client) to calculate the loss of earnings, which is a perfectly normal thing for a solicitor dealing with this type of case to ask an accountant to do, you should ask exactly what you are being asked to produce. Is it:

an expert's report for court purposes?a report of another kind?just a calculation / schedule?

​Do report back when you are clear what you are being asked for.  There are worlds of difference between the above.

But underlying all the above is a calculation of the loss.  The approach you set out in your second paragraph is basically right, but with the following provisos:

if this is a personal injury case (i.e. if the accident caused a physical injury to your client, rather than, say, damage to the fabric of his business premises) all your calculations should be net of tax;If the loss is continuing into the future you will need a whole different set of calculations. Do report back if that is the case.

I hope this helps.

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