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Case Study - Economic Loss - Taxi Operator

  • Writer: Arnold Shields
    Arnold Shields
  • Oct 13, 2009
  • 2 min read

Updated: Jun 24

We were recently engaged to calculate the economic loss of a taxi operator who suffered serious injuries in a motor vehicle accident. As a result, he was unable to work at all for approximately three months.


At first glance, the plaintiff’s claim seemed weak. His tax return for the relevant year reported a taxable income of just $25,000. Not exactly compelling evidence of a substantial financial loss.


However, those of us who have worked on personal injury cases involving taxi drivers know that many in the industry tend to underreport income. The solicitor, recognising the potential gap between declared and actual income, engaged Dolman Bateman to investigate further.


Uncovering the Real Story

During our initial conference, it became clear the plaintiff was not a typical taxi driver—he was a taxi operator, managing a fleet of 14 vehicles. He demonstrated a strong commercial understanding of his business model and its financial trajectory.


One of our key methods as forensic accountants is comparing a client’s story to the financial statements and tax returns. These documents, while often underreported, still hold valuable data that tell a broader narrative.


What we discovered was striking.


The Business Model: A Compounding Growth Strategy

The plaintiff was actively growing his fleet. Each taxi had a regulated operational life of 6.5 years and was purchased new with a 3-year loan (0% residual). The first three years produced only marginal profits per vehicle due to debt repayments. However, after the loan period, the income from each taxi increased substantially as the operating costs dropped sharply.


By developing a detailed financial model, matched to past performance, we demonstrated with confidence that, if not for the accident, the plaintiff’s income in the following year would have been around $140,000, with strong upward growth thereafter.


The plaintiff wasn’t just running a stable business; he was on the verge of a compounding profitability curve.


Facts That Held Up

The plaintiff achieved a significant settlement, but only because key criteria were met:

  • His business model and personal account aligned with the objective evidence in the financial records

  • We could rely on the financial statements, despite the low taxable income

  • We built a robust financial model showing clear, logical income projections

This case underscores the power of forensic accounting. It’s not just about numbers on a page, it’s about understanding the full economic picture and translating that into a credible, defensible claim.


If you're working on a personal injury matter where the reported income doesn’t reflect the whole story, our team can help uncover the economic reality.


Contact us today for expert forensic accounting support.


Disclaimer:

The information provided in this article is general in nature and does not constitute personal financial, legal or tax advice. While every effort has been made to ensure the accuracy of this content at the time of publication, tax laws and regulations may change, and individual circumstances vary. Dolman Bateman accepts no responsibility or liability for any loss or damage incurred as a result of acting on or relying upon any of the information contained herein. You should seek professional advice tailored to your specific situation before making any financial or tax decision.

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