Evolution Group plc occupied a significant number of properties nationwide under a variety of leases. These leases brought with them potential liabilities in respect of dilapidations, both during and at the end of the terms. Financial Reporting Standard 12 requires that an appropriate provision be made for such contingent liabilities within corporate accounts.

Evolution Group commissioned tmd to carry out an assessment of its potential liabilities in what is a complex field. Any assessment needs to take account of the liability at a particular base date and this should be reviewed annually against appropriate cost indices. Account also needs to be taken of other heads of claim, such as professional fees, loss of mense profits and the potential for damages in lieu of VAT. Regard should also be had to the potential impact of Section 18(1) of the Landlord and Tenant Act 1927 in respect of diminution in value.

Following a review of the leases and inspection of all the premises, tmd was able to advise as to an appropriate provision for this contingent liability.