What to Ask a Forensic Economic Expert in a Tax Dispute

A well-drafted question to a forensic economic expert often decides half the dispute before the examination itself even begins. The reverse is also true: a poorly framed question — one that is legal, evaluative, or outside the field of specialised knowledge — leads the expert to decline to answer, produces an incomplete report, or can even get that report excluded from the evidence altogether. Below we set out how a lawyer, investigator, detective, or business owner should frame questions so that a forensic economic examination produces an admissible report that actually works toward the outcome in a tax dispute.

The core rule: stay within specialised economic knowledge

A forensic economic expert answers only questions that require specialised knowledge in accounting and tax accounting, enterprise economics, or financial and credit operations. The Law of Ukraine “On Forensic Expert Activity” and the Instruction on the Assignment and Conduct of Forensic Examinations and Expert Studies (Ministry of Justice Order No. 53/5) set the boundaries of the expert’s competence, and settled court practice consistently holds that the expert does not decide questions of law. This is not a formality: to the extent the expert strays onto legal territory, the court will simply disregard that part of the report.

There are three things a forensic economic expert never establishes, as a matter of principle:

• legal characterisation — whether an act is a crime, whether a specific statutory provision has been breached, whether a transaction is void;
• fault and intent — whether a person acted deliberately or sought to evade the payment of tax;
• procedural assessment of evidence — whether a witness statement is truthful, or whether a business transaction is “real” as a legal fact.

All of this is the province of the investigator, detective, prosecutor, and court. The expert works with documents and figures: what follows from them, whether they are internally consistent, whether they support the amount claimed. A simple test: if a question can only be answered by interpreting a rule of law or by assessing someone’s intentions, it is not a question for an economist.

How to choose the speciality: 11.1, 11.2, or 11.3

Under the Ministry of Justice’s register of expert specialities, forensic economic examination is divided into three principal streams. Choosing correctly determines whether the expert is even entitled to answer your question — otherwise you will have to commission a fresh examination and lose months.

Speciality	Subject of study	When to choose
11.1	Documents of accounting, tax accounting, and reporting	VAT or corporate income tax assessments, correctness of how transactions are recorded, formation of the input VAT credit, reporting
11.2	Documents on the economic activity of enterprises and organisations	Cost of goods, pricing, calculation of losses, financial results, justification and use of funds
11.3	Documents of financial and credit operations	Loans, deposits, banking settlements, movement of funds across accounts, debt servicing

In tax disputes the core is most often 11.1. Where the dispute concerns losses, price, or the economic justification of costs, 11.2 is engaged. Questions about the movement of funds through banks belong to 11.3. Complex cases — say, an assessment arising from a supply chain — may call for a combined examination across several specialities at once.

Examples of correctly framed questions

The following are working templates; the square brackets are filled with the specific details of your case.

Accounting and reporting (11.1)

• Do the primary documents and accounting registers provided substantiate the amount of value-added tax assessed under the audit report of the State Tax Service (DPS) dated [date]?
• Are the business transactions with the counterparty [name] for the period [period] recorded in the enterprise’s accounting and tax records in accordance with the documents provided?
• According to the accounting data, has the object of corporate income tax for [period] been correctly determined in line with the rules of the Tax Code of Ukraine (PK)?
• Do the figures in the VAT return for [period] correspond to the taxpayer’s registers and primary documents?

Economic activity (11.2)

• Is the amount of expenses attributed by the enterprise to the cost of goods for [period] substantiated by documents?
• What financial result of the enterprise’s activity for [period] follows from the documents provided?

Financial and credit operations (11.3)

• Is the intended use of the credit funds received under agreement [details] substantiated by documents?
• What was the movement of funds across the enterprise’s settlement account for [period] according to the bank statements provided?

Note the construction: “is it substantiated by documents…”, “is it recorded in the accounts…”, “do the figures correspond to the figures…”. The question is always tied to specific documents and a defined period — and always about a fact that follows from the documents, not about its legal assessment.

What you cannot ask a forensic economic expert

Here are the formulations that, in practice, have to be rejected or reworded because they fall outside specialised knowledge:

• “Did the taxpayer evade the payment of tax?” — this is the legal characterisation of an act, within the court’s competence.
• “Did the director intend to understate the tax?” — establishing the subjective element; the expert does not examine intent.
• “Is the business transaction fictitious or lacking substance?” — “fictitiousness” and “lack of substance” are legal assessments; the expert can only say whether the transaction is substantiated by documents.
• “Is the transaction void?” — this is an assessment of the transaction’s validity.
• “Did the tax authority act lawfully?” — an assessment of the lawfulness of a decision by a public authority.

The remedy is simple — turn the law into a fact. Instead of “did he evade”, ask “is the amount of the assessment substantiated”. Instead of “is the transaction fictitious”, ask “is the transaction recorded in the accounts and confirmed by primary documents”. The expert will establish the fact; the court will draw the legal conclusion from it.

Examination by court order or a study on commission?

These are two different routes, and they are often confused.

A forensic examination is conducted within proceedings. In commercial, civil, and administrative justice it is appointed by the court through its ruling — under the Commercial Procedure Code (HPK), the Civil Procedure Code (TsPK), or the Code of Administrative Procedure (KASU). In criminal proceedings the expert is engaged by a party: for the prosecution — the investigator, detective, or prosecutor; for the defence — the lawyer; and in cases defined by law the examination is ordered by the investigating judge on a party’s motion (the procedure is governed by the Criminal Procedure Code, KPK). In criminal proceedings for tax evasion (Article 212 of the Criminal Code, KK), the pre-trial investigation is conducted by the Bureau of Economic Security (BEB), so it is the BEB detective who engages the expert. A forensic expert is warned of criminal liability for a knowingly false report (Article 384 of the Criminal Code), and the report itself is an independent source of evidence.

An expert study on commission is carried out on the request of a person or on a lawyer’s inquiry, outside proceedings — for example, before filing a claim or to weigh the prospects of a dispute. It is a full professional document, but procedurally it is a written piece of evidence submitted by a party, not a “forensic examination” within the meaning of the procedural code, and the expert is not warned of criminal liability here. In practice such a study often becomes the groundwork for filing, in court, a reasoned motion to appoint a full forensic examination.

A practical rule of thumb: if the case is already in court and you need evidence of the highest weight, ask the court to order an examination by ruling, or file a motion to engage an expert. If you are at the preparation stage, assessing your position or trying to understand whether there is even a subject to dispute, start with a study on commission.

Which materials to provide the expert

Incomplete materials are the main reason for the cautious conclusion “it is not possible to establish”. A forensic economic expert does not gather documents independently and does not requisition them — the expert examines only what is provided. The minimum set for a tax dispute:

• primary documents — contracts, delivery and VAT invoices, work-completion acts, bills, transport waybills, cash and bank documents;
• accounting registers — turnover-balance sheets, account cards and analytics, the general ledger;
• tax reporting — returns, annexes, and calculations for the disputed period;
• audit materials — the DPS audit report with annexes, tax notifications-decisions (TNR), and the taxpayer’s objections;
• where relevant — the accounting policy, orders, and tax-accounting registers.

The better and more complete the set, the narrower and more precise the answer will be. The expert will record any gap or contradiction in the documents, but has no right to “fill in” what is missing.

Typical mistakes that render the report useless

• Legal questions instead of economic ones — “did he evade”, “is the transaction fictitious”, “is the tax notification-decision lawful”. That part of the report will be rejected.
• Evaluative and speculative wording — “could he have”, “is it probable”, with no anchor in documents.
• Incomplete materials — you supplied the audit report but not the primary documents and registers; the expert can neither confirm nor refute the amount.
• Questions with no tie to a period and documents — too general to admit a specific answer.
• The wrong speciality — a question about the movement of bank funds put to an 11.1 expert instead of 11.3.
• Too many “just in case” questions — this dilutes the study and drags out the timeline; a few precise questions are better.

Before filing the motion, it is worth agreeing the list of questions with the expert — a standard and entirely legitimate practice that saves months and guards against having to reword them mid-proceedings.

If you are preparing a motion to appoint an examination or weighing the prospects of a tax dispute, a short preliminary consultation will help you frame the questions correctly and choose the right speciality. Get in touch — we will work through your situation and prepare a list of questions that works toward your result.