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A dismissed employee with their box of office belongings

Estimated expenses order led to unfair dismissal


An employment appeal tribunal found that an accountant was unfairly dismissed for refusing to obey the firm principal's orders to include estimated expenses on clients' self assessment filings.

11th Dec 2023
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The Employment Appeal Tribunal found that a ruling of dishonesty against Stuart Harris Associates Ltd should be set aside, but that this did not affect a finding of constructive dismissal over their employee Ms Gobudhun.


Ms Gobudhun joined Stuart Harris Associates Ltd (SHA) in November 2014 as an accountant whose responsibilities included the completion of income tax returns. By her own admission, Gobudhun had little knowledge of income tax when she started her employment and therefore relied upon SHA’s principal, Mr Harris, for guidance.

Harris instructed Gobudhun to include estimates of client expenses, not only where the figures received were incomplete or absent, but also where the client had provided precise figures.

HMRC investigation

In 2020, Gobudhun became aware that HMRC had investigated a client’s tax affairs. The client had provided documents showing expenses of £7,977, but their tax return included expenses of £17,944. At the end of the investigation, HMRC had disallowed all but £3,950 of the expenses. However, Harris instructed Gobudhun to continue to prepare future returns for the same client using the same level of estimated expenses.

Gobudhun subsequently became aware of an email conversation between Harris and another client, where the client had asked why some of the expenses on her return were more than double the amounts she had provided. Harris explained that clients often forget to declare all of their expenses, so SHA “add a bit more by way of estimates”.

An unsettling practice

All of this left Gobudhun feeling uneasy and she became concerned that the approach she was being told to adopt was not acceptable practice. She contacted the ACCA who advised that estimated expenses should not be included on a tax return.

The next time Harris instructed her to include significant estimates, Gobudhun queried the practice in light of HMRC’s investigation findings. When Harris insisted, Gobudhun dug her heels in and refused to post unsubstantiated estimates.

Gobudhun was subsequently suspended for refusing to follow instructions. A meeting was held where Harris maintained that “HMRC allow estimates” and that he didn’t understand why Gobudhun was only now questioning the practice. Gobudhun was given a first and final warning, briefly returned to work and then resigned. Several months later, she submitted a claim for constructive unfair dismissal based on a breakdown of trust.


The claim was heard by the Employment Tribunal (ET) which was forced to adjourn for several months due to time constraints. During this time the Judge conducted research into the law and practice of income tax and summarised the hearing to date, adding that his “provisional view” was that Gobudhun had been constructively dismissed.

On resuming the hearing, the ET confirmed its provisional view, referring to Harris as “either dishonest or incompetent”.


SHA appealed the decision to the Employment Appeal Tribunal (EAT) on seven grounds, specifically that the Judge had:

  1. reached a concluded view before the closing submissions,
  2. ‘descended into the arena’ by conducting their own research and cross-examining Harris,
  3. incorrectly made a finding of dishonesty,
  4. failed to apply the test in Ivey v Genting Casinos,
  5. given inadequate reasons for his finding on dishonesty,
  6. failed to apply the objective test in determining if there was a breach of contract,
  7. recharacterised the breach and so had changed the matter under dispute.

Ground 1

The EAT determined that there had not been a concluded view reached prior to the final judgement. The ‘provisional view’ was given partly so that the parties could see the factors which the tribunal intended to base its decision on and made it clear that no decision had actually been reached at that point.

Ground 2

The Judge had, at several points, questioned Harris directly or interjected comments while others were engaged in questioning. However, the EAT decided these questions and comments were intended to seek clarification, rather than that the Judge had taken over cross-examining the witness. While some of the comments (such as “chancing an arm”) were said by the EAT to be injudicious, this did not render the trial unfair.

Grounds 3 and 4

Whilst the Judge had found Harris to be dishonest and/or incompetent, this had not influenced his finding in favour of Gobudhun.

It was further found that the Judge had, regardless, applied the wrong test in reaching his decision of dishonesty; however, as this had not contributed to the finding of constructive dismissal it was irrelevant.

Grounds 5, 6 and 7

Finally, grounds 5, 6 and 7 became moot in light of the findings for grounds 3 and 4 and were not therefore considered in any detail.

The appeal against the findings of dishonesty/incompetence were upheld, with all other aspects being dismissed.

A reminder

In case any reader finds themselves in Gobudhun’s position, HMRC’s stance on estimated (and provisional) figures on tax returns can be found here.

Replies (14)

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By FactChecker
11th Dec 2023 17:35

"Harris instructed Gobudhun to include estimates of client expenses, not only where the figures received were incomplete or absent, but also where the client had provided precise figures."
+ "Harris explained that clients often forget to declare all of their expenses, so SHA “add a bit more by way of estimates”"!

Forget the Employment aspect ... has HMRC launched enquiries into ALL returns submitted by SHA?
Money for old rope by the sound of it.

Thanks (14)
Replying to FactChecker:
By mrshamilton
12th Dec 2023 09:42

Exactly my thoughts!

Thanks (0)
Replying to mrshamilton:
Should Be Working ... not playing with the car
By should_be_working
12th Dec 2023 10:51

They may already be planning to do just that. Remember Christopher Lunn?

Thanks (1)
Replying to should_be_working:
By stepurhan
12th Dec 2023 13:10

Very well. Picked up some of his ex-clients. Extremely difficult to re-educate.

Thanks (0)
By WallyGandy
12th Dec 2023 09:44

And SHA are Chartered Certified Accountants!
Thanks for the link....SAM 121190 seems OK with MINOR estimates of LEGITIMATE BUSINESS EXPENSES which, if anything, should err on the side of caution using our skill, judgement and knowledge of the client and their industry.

We all have ample opportunity to SUGGEST estimated items to the client and seek approval before such are included. Clients are human- like us they can forget (or not be aware)

SHA took it to a new level. And you won't find me on that level at any time. "My client says...."

Thanks (0)
By JS23
12th Dec 2023 09:51

No wonder lots of client come and say.. "But my friends accountant allows this and that as an expense" and finally you loose a client as they see you are not accomodating accountant like others who allows them to claim expenses that are not business in nature.

Not only HMRC is out of pocket but the client is left in danger of false declaratio and the profession is left to shame too.

Thanks (8)
Donald MacKenzie
By Donald MacKenzie
12th Dec 2023 09:58

If we were all to “add a bit more by way of estimates” the resulting tax returns would be plain wrong - or "dishonest".

Thanks (2)
By TB93
12th Dec 2023 10:07

It's funny that a quick google search returns the words "Friendly Accountant". Reminds me of when people look for a "Friendly" MOT tester for their cars that wouldn't pass otherwise.

Thanks (0)
Replying to TB93:
By Postingcomments
12th Dec 2023 10:35

I suppose all this digital and cloud everything could be a way of surveilling everything remotely and picking out the accounts and tax returns that are BS.

Or that's the theory. HMRC could open "firm audits" in cases like this now, but they don't. When they have more info, I expect they will be equally clueless with it.

Thanks (1)
Replying to TB93:
By Open all hours
12th Dec 2023 11:31

My Escort van speedo cable became dislodged and I expected it to fail the MOT.
Apparently it passed and my ‘friend’ had even renewed the band to make the flapping cable more secure.
42 years ago mind.

Thanks (0)
Replying to Open all hours:
By Yossarian
12th Dec 2023 21:34

Speedometers were a weird anomaly in that whilst it was illegal to drive on the road without a working one, they weren't part of the MOT. I gather that has since changed.

Thanks (0)
By deanshepherd
13th Dec 2023 09:03

Ironic that this chap lists Groucho Marx as one of his 'team' on the website alongside the following quote:

“The secret of life is honesty and fair dealing. If you can fake that, you’ve got it made.”

Thanks (0)
By Mr J Andrews
13th Dec 2023 10:14

Hopefully Ms Gobudhun's settlement payment went some way toward the abhorrent situation this poor women was put under.
Two [ at least ] disturbing facts emerging from this saga are that a ruling of dishonesty against this North London practice was set aside whilst the back tax of approximately £5K from the specific HMRC investigation was deemed to warrant a minimum penalty charge of just 15%.
As other postings infer, Harris must now surely be open to a visit from HMRC's Fraud Investigation Service with COP 8 - {or 9 !} at the fore and hopefully we'll see some follow up with the Revenue's ''Naming & Shaming''. Meanwhile perhaps two other named members of Harris's team [ Groucho Marx & Dr Who - William Hartnell - should be removed from his website and replaced by Walter Mitty and Al Capone.

Thanks (0)
By Pam Moreland
13th Dec 2023 14:56

Well done to her for standing her ground and like some of the other commentators have said I hope she has been properly compensated for her actions.
I have also picked up enquiry cases and also some work from other accountants (including Christopher Lunn) and am not impressed with what I have seen. Sensible and appropriate estimates are not a problem (although a white space disclosure is probably the best course of action). Fiction - tax returns are not competing for the Booker prize although some I have seen have come pretty close to it.
I am ICAEW and we are now going to have to do ethics training as a compulsory part of our CPD. Well call me old fashioned but isn't that something we should instinctively know? Although it never hurts to be reminded of it.
Let us just hope our 'superiors' do the same - but I am not holding my breath as ethics and honesty in public life are probably at an all time low.

Thanks (3)