The claimant in Hughes v The Coupers Partnership, a commercial director in a firm of surveyors, originally had a contractual entitlement to the use of a company car. In 2002, as a result of changes to car taxation, the employer decided to withdraw the benefit. A meeting to discuss this took place and subsequently the claimant made expenses claims for business mileage. These claims were processed by the employer and paid. Forms detailing the expenses were generally submitted by the claimant himself to HMRC.  
Many years later the managing director discovered that the claimant had made claims for business mileage for dates when he had been at his desk all day or when he had not been where he said he had been. In due course the claimant was dismissed for gross misconduct. He brought an unfair dismissal claim, arguing that the MD had always authorised him to make the claims. He said that it was agreed at the meeting in 2002 that he would submit claims at an agreed sum of £480 per month to compensate him for the loss of the company car. 

The Tribunal and EAT both agreed that the dismissal was fair. The Tribunal accepted the employer's account of the 2002 meeting that the agreement was that the claimant would receive an additional £7,000 salary and would be entitled to claim 40p per mile when he used his car for genuine business reasons. In any event, the claimant could not rely on an alleged agreement with the employer to make set monthly claims regardless of actual mileage because it would have been an illegal fraud on the Revenue.

It is established law that the illegal performance of a contract does not make it unenforceable unless, in addition to knowledge of the facts which make it illegal, the employee "actively participates" – a question of fact. Here there clearly was a sufficient level of involvement – the EAT commented that the claimant could not have submitted the dishonest expenses claims for any other reason than to defraud the Revenue.