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Controller was summarily dismissed for tax fraud

January 2009 - Tax & Private Client. Legal Developments by Norrbom Vinding Law Firm, member of ius laboris.

More articles by this firm.

07-11-2008 - Creative accounting cost a controller a summary dismissal. But tax fraud is a serious breach of trust for a controller, so that was okay in the Court’s view.

High Court judgment

Annemarie Boddum
amb@norrbomvinding.com

Creative accounting cost a controller a summary dismissal. But tax fraud is a serious breach of trust for a controller, so that was okay in the Court's view.

Contacting the tax authorities in the middle of an income year is taxing. Their documentation requirements are strict. The controller did not want the bother so he issued the instruction to his accounting staff that cost him the job: he asked them to pay his salary contrary to his tax card because that was ‚Äėan easy way to do it'.

The controller was responsible for the accounting and payroll functions and he had asked his staff on several occasions to change his personal allowance although he had not had his tax card changed accordingly. His fiddling was accidentally discovered by his employer. The employer had his suspicions confirmed by the tax authorities and summarily dismissed the controller. However, the controller did not believe that there was anything wrong with what he had done and the parties therefore ended up in court. His practices had not put the business at risk of any financial loss, the controller argued.

The Court found that the instructions given to the accounting staff were contrary to the Danish Tax at Source Act. The Court further found that the controller's practices constituted such a serious breach of trust in relation to his employer as to justify summary dismissal - without subjecting his tax situation and general financial situation to closer scrutiny.

Norrbom Vinding notes:

  • that, not surprisingly, the case illustrates that if a controller acts and issues instructions contrary to Danish law - and to promote his own interests, at that - this will constitute gross misconduct and warrant summary dismissal 

This information does not constitute legal advice and should not be relied upon as such

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