Upper Tribunal Tax and Chancery Chamber

UT-2024-000019 - [2025] UKUT 00257 (TCC)

Fecha: 01-May-2025

Introduction

Introduction

By a reference (the “Reference”) dated 23 February 2024, the Applicant (“AP”) referred to this Tribunal a determination made by the Determinations Panel (the “Panel”) of the Respondent (“the Regulator”) that a contribution notice (“CN”) should be issued to her under section 38 of the Pensions Act 2004 (“PA 2004”) in the sum of £180,218.50, together with £37,134.66 as a passage of time adjustment. The Regulator argues on this Reference that a CN should be issued to AP in the sum of £360,437 plus a passage of time adjustment that as at 16 April 2025 stood at £143,330.

We will analyse the factual matrix in more detail in due course, but by way of introduction the Reference concerns three acts which are alleged to have extracted value from a company called Discovery Flexibles Limited (“DFL”), which was the sole sponsoring employer of an occupational pension scheme called the Danapak Flexibles Retirement Benefits Scheme (“the Scheme”), over a period when the Scheme was in deficit on all funding measures and DFL was paying minimal deficit repair contributions in reliance on its weak financial state.

AP was one of two directors of DFL until 23 March 2016. She was also one of four ultimate owners of DFL, through a 25% shareholding in a company called Discovery Flexibles Holdings Limited (“DFHL”), which was DFL’s parent. The other owners of DFHL were (i) AP’s brother Paul (“PW”), (ii) her brother Chris (“CW”), and (iii) her parents.

The three acts which the Regulator relies on against AP are:

(1)

Monthly extractions of £20,000 from DFL since September 2015 (increasing to £23,000 in November 2017) as “management charges” or “dividends”, for the benefit of CW and his wife.

(2)

The use of DFL’s resources to fund the purchase on 18 September 2015 of the shares in DFHL held by AP and other shareholders. The purchase was funded by an £800,000 drawdown from DFL’s invoice finance facility. That money was paid away by DFL to an associated company called Pink Printers Limited (“Pink”) in return for an unsecured, interest-free receivable, which was never paid and which DFL has written off in its accounts. The Regulator says that this led to DFL being financially weakened and no longer having the £800,000 available for the Scheme, while AP received £360,437 of that money in or about March 2016 as the purchase price for her shares in DFHL.

(3)

The use of DFL’s assets since September 2015 to support other group companies, leading to a write-off of debt of £224,481.