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

We heard from AP, who provided three witness statements and was cross-examined by Mr Robinson.

AP explained that the idea of a family business came about when CW approached her father in about 1992 saying he was unhappy with his job and asking if their father would put up the finances and join him in a business. Her father suggested setting up a family business with equal shares that CW could run with AP and PW (her other brother) joining if and when they wanted to. With this in mind CW left his job and their father funded him while they searched for a suitable business to buy.

In November 1993 her father purchased Tressanda Ltd (“Tressandra”) (a litho printing business) splitting the shares 4 ways between AP’s two brothers, AP herself and her parents. CW became the Managing Director (“MD”) of Tressanda and took on the day to day running of the company with both parents helping out (with no remuneration) whilst CW found his feet. Her father continued to help out part time in Tressanda taking no remuneration right up to the point it closed in May 2019. AP’s then husband (Ian Hartley) joined the business early in 1996.

Over the years the business grew and invested in new products and eventually invested in additional businesses (all on the same principle of a four-way ownership split) including DFL, which was acquired in May 2008 using DFHL.

In May 2008 DFL entered an invoice discounting facility with RBS. This was initially limited to £500,000 but later increased. As part of this arrangement a debenture was granted to RBS over DFL’s assets. That debenture was to have priority over the sums owed to the Scheme. The facility was for the purposes of providing DFL with working capital; it was not limited to invoice discounting. It was clearly recognised that entering the invoice discounting facility, and the giving of security for it, risked prejudicing the Scheme, and so DFL needed to seek clearance from the Regulator.

In 2009 AP and her then husband (Ian Hartley) separated. CW removed Ian from all the businesses and any shares Ian held in the family companies were transferred to AP’s father who held them on her behalf until her divorce was finalized in 2011, at which point the shares were transferred to her.

At the time of Ian's removal, CW asked AP to take over Ian's roles as director and secretary of the companies. This was presented to her as a necessity, as CW believed that it was a legal requirement that these positions were filled and that it was not possible for him to act as sole director. In January 2010 AP became director and company secretary of DFL and other family companies. She says that she took these positions on with no prior experience, training or explanation of the responsibilities involved and no knowledge of the legal responsibilities that went with accepting the roles. Prior to taking on the roles, she had for several years been a “stay-at-home mother”, joining Tressanda on a part-time basis when her children went to school. She accepted the roles primarily as she was the only family member other than CW employed within the businesses and because she felt responsible for these vacancies due to the breakup of her marriage.

AP says that, despite becoming a director in 2010, CW treated her no differently to any of the other shareholders. She was given no additional information and not involved in any of the day to day running or outside audit of any of the companies other than Tressanda, in which she was working full time. In her opinion, CW did not want any additional input and appeared to see Mr Hartley leaving as an opportunity not to have any interference in his day to day running of the businesses.

Mr Robinson took AP to several emails (in both 2011 and 2015) where she forwarded emails from Mr Kelly (“GK”), the Finance Director, containing financial information about DFL to her brother PW. AP said that it was not regular practice for her to receive this information. It would usually be when CW was doing something such as amending his salary or at the time of the share sale. She agreed that, at least since 2011, it had been apparent that this material existed, and she could ask for it if she wanted it.

AP only received remuneration and benefits in relation to her work for Tressanda. Unlike (she says) CW and his team, the maximum salary she received for working at Tressanda, including when she was MD, was £45,000 per annum with no company car or bonuses. Rather than taking money out of the company, she supported it with money of her own for as long as she could to protect the employees’ jobs and try every way possible to save the company.

AP says that CW learned in 2011 that only one director was required, but chose to leave the position as it was for a number of reasons. He felt that DFL only having one director would adversely affect its credit rating. From a purely practical point of view if CW were to have an accident or become incapacitated there would need to be someone who could sign any necessary forms as a director. CW had been advised that, should the family sell the companies at any point, entrepreneur's relief (which could reduce the rate of capital gains tax paid on gains made on selling the shares to 10%) would apply to anyone who was a director. Once he learnt this he tried to persuade her brother PW and their father to become directors or company secretaries so that they could utilize this relief should they ever sell. AP says that it was only ever suggested that they would be directors/company secretaries ‘on paper' as CW had no desire to have any additional input in the management and running of the companies.

AP gave an account of tensions in the Wrigley family in the run up to the 2016 transaction. She says that over the years as the businesses grew CW came to see it more as his business empire, rather than a family business. It appeared that he felt that his achievements were undervalued, and he was being constrained by having to answer to other shareholders. CW had suggested that the businesses were “supporting” AP.

In 2011, following the acquisition of DFL, CW proposed a significant (50%) salary rise and that he should have a controlling interest in the companies. After much family discussion, the salary increase and its payment through a company called Ash 126 Ltd (“Ash 126”) were agreed. As CW was spending a lot of time on other family companies, it was at this point (following a suggestion from her father) that AP took over the role of MD at Tressanda. This company encountered financial difficulties and CW’s response to requests for support from other companies could never be predicted; he could often be quite abusive and unpleasant if he did not agree with something.

In July 2012 CW was again pushing to close Tressanda. He proposed that a family company pay a dividend to all shareholders and that PW and he took theirs, whilst AP and her father should invest their dividends in Tressanda. When they refused, CW removed AP as a signatory on Tressanda's bank accounts. She only found out when she called the bank as she could not gain access to the accounts.

Around this time CW removed all the funds from the Pink’s bank accounts and, in AP’s words, proceeded to hold the shareholders to ransom over the splitting up of the companies. His suggestion at the time was that he took DFL whilst the others took on the remaining companies. AP’s parents sought the advice of their financial advisor who in turn introduced them to a lawyer. It was pointed out to them that they could have legal recourse against CW as he had removed company monies without consent, but at this stage this was not something they were willing to do. A compromise was put to CW under which he would become a 51% owner of the businesses, able to run them on a day-to-day basis as he saw fit, but with contractual protections for the other shareholders. This was discussed, but because of difficulties CW was encountering with another business, this proposal was not implemented.

AP says that, as she had to deal with CW regarding Tressanda, she very much ended up as the "go-between" between the rest of the family and CW. She was trying to keep any discussions as non-volatile as possible and attempting to protect her parents from any distress. Her evaluation of the situation was that, by September 2015, when CW first proposed buying the rest of the family out, the family had very much been split into two factions when it came to anything to do with the family business. Those were her parents, PW and herself on one side and CW on the other. As a result, CW's offer came totally out of the blue, as previously he had only used aggressive tactics to try and gain control of the business.

During 2015, the shareholders had become aware of a range of patented new products that were expected to bring significant growth and when the offer to buy the other shareholders out was made by CW, the others suspected that CW wanted to buy them out before any success with these products could further increase the value of the company. AP says that a review of information supplied by Mr Urquhart (the current owner of DFL) to the Regulator since the issue of the Warning Notice shows that several of these patents are still expected to generate future revenues.

Turning to the sale process, AP says that on 14 September 2015 she and the other shareholders received a proposal from CW to buy out their shareholdings in DFL and Pink. This offer was completely out of the blue, as there had been no hint or mention of a sale prior to this. Because of her previous dealings with CW, she was wary of taking the proposal at face value and she thought CW may well have a hidden agenda. She was also nervous that the others could be subject to an angry outburst if they did not agree or at least respond in some way quite quickly. So, she adopted the approach of asking CW lots of questions. This was both a stalling strategy to give her, PW and her father time to talk, as well as an attempt to get CW to reveal more of his underlying motives.

AP says that she was busy with Tressanda at the time and spent very little time on probing the details of a sale as she believed it was being correctly and professionally handled by Ashgates (a firm of accountants). Her main concern at the time was evaluating the proposal put forward by CW and its implications for her going forward, rather than considering how he was proposing to fund the buyout, especially as he was buying the shareholders out and any finance he took out for the purchase would be his responsibility going forward.

AP says she took any reference CW made to funds not being available if there was a downturn in business to be typical of the methods employed by him to browbeat the shareholders into making a snap decision and not giving them adequate time to evaluate the proposal. There was no indication during the time from the funds being drawn down to the sale of the shares (approximately 6 months) that there was a need for these funds to be returned to DFL to cover other financial commitments.

Despite misgivings, AP was quite happy to accept CW’s offer as she saw it as offering a reasonable price for her shares and an opportunity to get away from as much business involvement with CW as possible and so to protect herself and the rest of her family (particularly her parents) from potential future upset.

Turning to the sale process in more detail, CW made his offer in an email to AP, her father and PW on 14 September. His email is as follows:

“Hi All,

There are several things happening at the moment which I will get to below. Firstly ,though, I think it is worth giving you an idea of the businesses we run. I was concerned at Paul's comments last Xmas, whereby he stated that he preferred bonuses to be "long term". Proctor and Gamble can afford to be long term, we don't have that luxury. We bought [DFL] for £1 and the multinational who sold it to us high fived each other for getting it off their hands! Basically, it has a multimillion pound hole in its pension fund which I have simply kicked down the road for the last 7 years.

We are in trouble at the moment. I come back to Paul's comment. We do not own Proctor and Gamble. We own businesses that sit on the edge of bankruptcy every day. We lost c£57K in July at [DFL].

[One of DFL’s customers] spent c£6M with [DFL] last year and c£2M this year. It hurts.

However, there is an upside. We have virtually no borrowings against our invoice financing facility.

So, I am thinking, here is your opportunity to cash in.

There is £400k in Pink. If I can drawdown £800K from [DFL] I could pay you £400K each for the shares. I would have to keep it running for 20 months to get my £400K but I will take that challenge.

I am not concerned (personally) whether you go for the idea or not. Please believe me, I am not trying to take advantage and this has nothing to do with the Foils debacle. I just see an opportunity for us.

What do I see? Grandchildren who would welcome £50K+ at this time in their lives. Ann would be financially secure.

Have a think but, don't think too long. If we lose £57K next month then we have £57K less to pay you.

I am just seeing a window of opportunity.

Regards, Chris”

PW worked for Proctor and Gamble at the time of this email. AP “replied to all” on 15 September asking a number of questions, including why the companies did not pay dividends and then observing:

“If you draw down 800k from invoice financing in [DFL] how would you move it to you to buy the shares? If there is a connection to Pink and something happens to [DFL] could RBS (the invoice financing company) seize the assets of Pink and in effect bring down AF & Tressanda”

AP agreed that at this point she was envisaging DFL being unable to pay RBS and wondering what that would entail, in particular what it would mean for Tressanda. She also raised some points and questions about the implications of the proposal for her tax and pension position. In answer to a question from Mr Robinson, she agreed that she did not ask what these arrangements meant for the Scheme (DFL’s main creditor) but said that was “because I had no knowledge of the Scheme or how it's run or anything”.

AP was travelling home from holiday at the time, and she does not think that she took advice or spoke to anyone before replying.

CW replied on 16 September. He did not like the idea of paying dividends, as “We would pay a vast amount of tax” and concluded that part of his email by saying, “Please remember that I see a window. I do not see another window to pay out another £1.2M so my thinking is... take it whilst you can.” In response to AP’s specific question (quoted above), he said, “I would simply say to RBS "I want to drawdown £800K as a part of my payment to buy out the other shareholders" The debt would sit with [DFL] so, no risk to Tressanda.” AP agreed that CW was trying to reassure her that there was no risk to Tressanda here, but was making it absolutely clear that the debt would sit with DFL and DFL would owe money to RBS.

AP replied the next day (17 September) asking quite detailed and specific questions, to which CW replied at 7am on 18 September. As well as replying to AP’s detailed questions, he made these opening remarks:

“I talked to Paul yesterday and suggested we need to do the deal by 10th Oct before the Sept: results are in. I am concerned that [DFL] will make another loss and the bank might squeal at me drawing down £800K. I don't think the loss will be as big as August. However, I have been awake all night worrying about whether you were going to send me a shedload more questions and carne up with this plan. I don't think Gerry will have sent the bank the August figures yet so, when I have finished this email I am going to tell him to draw down £800K and pay it to Pink. So there will be your £1.2.M ring fenced. It can be undone if we wish. I will tell Gerry and Jimmy exactly why I am doing it. I need to treat them with respect.”

AP agreed that she understood that CW was making it clear that the money would be in Pink, but this could be unravelled. She agreed that she did not object to what CW was proposing.

CW instructed the drawdown that morning as he said he would. At 07:06 a.m. on 18 September 2015 CW wrote an email to GK in the following terms: "Gerry, Please would you draw down £800K and pay it to Pink. You have the bank details from the monthly invoices. I am trying to buy out the other shareholders." GK responded at 08:27 a.m. that morning to say that: "The drawdown is complete and I now await the funds reaching our current account.”

On 18 September AP’s father emailed AP and PW observing:

“It is possible that Chris is using the downturn in [DFL’s] results to bounce us into selling the shares to him at a knockdown price. He has long wanted to own 100% of it. We propose to suggest a meeting late next week to discuss the exit strategy for Pink and Tressanda.”

Mr Robinson suggested that her father does not appear to doubt that there was a downturn in DFL’s results. AP described it more that he “is believing what CW said in his statement” but agreed that she did not have the knowledge to contradict or question what CW said.

Mr Robinson took AP to some of the management information she was receiving. On 14 September, CW told AP about DFL’s £57,000 loss in July. On 17 September CW forwarded her an email from GK attaching the August results which showed a loss of £78,000 with sales £91,000 down on the previous year.

CW forwarded a similar email on 15 October, which had the September results. This showed a monthly profit of £37,000 against forecast of £68,000. In the year-to-date losses were £41,000 against £14,000 the year before.

On 28 September CW emailed David Newborough (at Ashgates) starting a discussion around the structure of the sale and involving Claire Howard (at Lings, a firm of accountants which acted for AP’s parents and their family trust). At that point various issues (including the exact ownership of some of the companies) were unclear and the possibility of appointing shares out to grandchildren was raised. On 2 October AP emailed CW and Mr Newborough with the results of some research she had carried out into the history of the various companies. AP agreed with Mr Robinson that she understood what was being proposed and had undertaken the “exam question” of working out who owns what, which was critical for the transaction to go forward.

On 12 October Mr Newborough wrote to AP, PW, CW and their father with his thoughts on what Ashgates had been asked to advise on. Ashgates had not been asked to advise on the deal between the family members or its terms, but he gave detailed advice on the structure and tax implications. He asked several questions and CW responded on the same day by annotating Mr Newborough’s email and on 13 November AP further annotated CW’s reply.

One of the issues being discussed was the possibility of all or part of the transaction being deferred. CW commented “Personally, I think 12 months is too long to wait due to the significant chance that some or all of the money held in Pink for the transaction may have to be transferred back to [DFL] for working capital. That would scupper the deal. For info, [DFL] had a reasonable sales month in September but a very poor orders month which doesn't bode well for the future.” The purpose of a delay would be to give AP’s children (and other grandchildren of her parents) an opportunity to claim a particular capital gains tax relief if they were given shares. On this, AP observed:

“To summarise Clare and Judy have little to gain by splitting the transactions all the others have at least £3k to gain but the question is do we have an issue waiting. Chris is really the best to answer this as he has in the point below where he has made his concerns clear about the money possibly not being there if we wait too long.”

The reference to “the point below” is to the following comment by CW (underlined by us below) in response to a question from Mr Newborough:

“Would the timing of delaying one of the transactions until 6 April 2016 be too long to wait given the potential tax savings? I think so as I said above. I did consider doing [DFL] now and Pink next tax year. However that exposes the Pink sale to [DFL] working capital requirements again because Pink owes [DFL] £800K. Also delaying any of the transactions delays paying everyone.”

On 26 October CW forwarded the emails from family members to Mr Newborough (copying the other family members including AP) and commenting:

“The shareholders would like to complete the deal as quickly as possible, paying as little tax as possible but are averse to being challenged by HMRC. There is no appetite for waiting 12 months and incorporating new directors. There appears to be a preference to do the deal now rather than over 2 tax years due to the uncertainty of funds availability in the future.”

AP agreed that none of the family members responded to that email or challenged CW’s view. Some further fact finding and structuring discussions followed.

On 30 October Mr Newborough wrote to CW, AP, PW and their father setting out where he and Ms Howard had got to and making a proposal for the way forward. On 2 November CW replied to Mr Newborough (copying in the other family members) to say, “All the shareholders have agreed your proposals as set out below. Please proceed.” Mr Newborough’s proposal was the following:

“1.

Pink sells the assets that it owns that are used by Tressanda Ltd to a Newco that is owned by all of the family members in the same shareholding allocation as Pink currently is. (NOTE the assets could be sold direct to Tressanda Ltd which would remove the need for another company with annual compliance, but would leave the assets at risk should Tressanda hit financial difficulties — my best estimate of compliance is around £lk pa)

2.

The loan balance between Pink and Tressanda is formally written off by way of board meeting minutes

3.

We undertake a valuation exercise to consider whether a total value of £1.6m for Pink and [DFHL] combined value (after the above changes to Pink position) is likely to have any issues if challenged by HMRC as not a true market value

4.

We provide the advice letters to the companies based on the structure of the deal (I.e. the formalising some of the comments already in the emails) and the valuation

5.

We provide advice letters to [CW] and [AP] regarding their personal tax implications of the transactions

6.

Bob & Irene take their advice from Claire

7.

[PW] takes advice as he sees fit

8.

Assuming the above is all satisfactory, Bob & Irene gift their shares to [CW, AP & PW] and holdover the capital gain

9.

Newco(s) are formed and acquire the entire shareholdings of Prink (sic) and [DFHL] (or Ash 126 could perhaps be used?)

10.

[CW, AP and PW] consider whether they wish to make any gifts to their children from their proceeds”

Mr Newborough highlighted that the legal form of the transaction would be a share sale by CW, PW and AP and commented:

“Assuming the position is that a Newco is purchasing Pink and Flexibles (or perhaps 2 newco's), this is a legal purchase of shares by Newco(s) from Chris, Ann and Paul. I must recommend that legal advice is taken by both sides to cover the legal and risk implications for the buyers and the sellers individually, although this is really an issue for Chris as the buyer. Normally a seller is very happy to have no agreement other than "you have my shares and I will have your cash", as they have not given any assurances or guarantees!

We do have a very brief document that is sometimes used when the transactions are inter-group or similar, so this could be used, although it would have to be on the basis that we cannot give any legal advice, so we would need to show we had advised you to take legal advice and you had chosen not to do so.

I appreciate that this, along with other comments in my emails can look like I am always trying to highlight risks, but I should say that this is just a requirement of our firm's risk management procedure. We can give our best advice based on our knowledge and experience, but cannot give guarantees so have to word things accordingly, and whilst we may have our view on risks being small in some cases we still have to highlight them for your consideration.”

In answer to a question from Judge Baldwin, AP said that she had not taken any advice (for herself or the company) except Ashgates’ tax advice. She thought that Ashgates would tell her if they needed to take advice from anyone else. She also thought that getting HMRC clearance would highlight any pitfalls, if there were any.

On 9 December Ashgates wrote (“Dear Chris & Ann”, i.e. CW and AP) to the Directors of DFHL and Pink outlining what was now proposed. The letter notes that the directors had approached Ashgates to state that it had been agreed that AP, PW and their parents would each sell their respective shareholdings in both Pink and DFHL for £400,000. An own share purchase had been considered but was rejected as at least some of the proceeds (in the case of both companies) would be subject to income tax as some shares had not been owned for at least 5 years.

The overall objectives were for AP and PW to receive their share of proceeds tax efficiently and for their parents to pass down their share of the proceeds as tax efficiently as possible. The resulting structure was a purchase by a new company of all the shares in DFHL and Pink with the “funds for the transaction are being borrowing (sic) from the current cash flow” of Pink and DFL. If there was a shortfall in funds, the balance could be left owing to CW. Mr Newborough said that the loan balances could be cleared by a dividend through the group or left outstanding, as to which he said that “As long as there are sufficient reserves that the balance could be cleared if the directors chose to do so, then there is no problem with the loan remaining outstanding between the group companies."

As far as AP’s parents were concerned the idea was that they would give their shares to CW, PW and AP, hold over the gain for CGT purposes (with the shares qualifying for business property relief from Inheritance Tax) with the result that CW and AP would pay 10% CGT on the gain arising on the sale (PW was resident in Switzerland at the time), which would be a lower rate than their parents would pay (as they did not qualify for entrepreneurs relief). It was envisaged that the three children would use the additional proceeds “to support their children, but this is not a condition of the gift”.

The letter concluded “You have instructed us to press ahead with actions to move these transactions forward as quickly as possible.” AP agreed that she did not suggest pausing to consider the impact of the proposal on DFL or the Scheme.

On 11 December Mr Newborough sent an email to AP, CW, PW and their father attaching a copy of that letter “for completeness”. He observed that it contained nothing new and that Ashgates had approached HMRC for pre-transaction clearance to give additional assurance as to the tax treatment.

On 23 December Mr Newborough sent CW, AP, PW and their father Ashgates’ valuation letter. In his covering email he wrote:

The valuation letter (addressed to the Directors of DFHL and Pink and designed to support the price being paid for DFHL and Pink) dated 22 December 2015 made the following comments in relation to DFL and the Scheme:

“The company has a defined pension benefits scheme. Per the audited 31 July 2014 accounts, the scheme had a deficit of £1,590,000.

We have received the FRS 17 Actuary report, prepared by JLT Benefit Solutions Ltd showing the scheme position as at 31 July 2015. The report shows a scheme deficit of £4,182,000, an increase in the deficit £2,592,000.

However, management have indicated they believe the assumptions in this report are unreasonable. Whilst the actuary has prepared illustrative figures using a more beneficial discount rate, under these assumptions the deficit is £1,735,000, however they have stated this would be hard to justify.

Given the signed report shows a deficit of £4,182,000, this is the figure we have had to use in our valuation.”

Ashgates valued DFHL at “between £1 and £1,200,000”, commenting that the company was very difficult to value given the uncertainty of the amount and timing of the pension deficit and that “In order to argue a £1,200,000 valuation of [DFHL], the company would have to prove that the pension deficit is highly unlikely to crystalise.” AP says that she was aware that the pension deficit figure being used (prepared by the actuaries as at 31 July 2015) was higher than the one in the July 2014 accounts; she just thought Ashgates were taking a prudent approach to valuing the company and it gave her comfort in the valuation process. Ashgates also commented that “In terms of a value we believe we could defend if HMRC were to investigate the value you have agreed would be in the region of £500,000.”

Ashgates’ valuation was attached to an e-mail sent to AP’s work email on 23 December 2015. By then she had gone on annual leave for Christmas and only had access to her work email via her mobile which (she says) would have made reading attachments very difficult. Mr Newborough did not ask recipients of his email to comment or raise any points regarding the valuation, although he did ask for some information he needed to start drafting the documentation.

AP says that she was aware from the accounts and the very basic information relayed during the purchase of DFL that there was a pension scheme deficit, but she was not aware of the figures. The only figures she recalls seeing were those in the annual audited published accounts, which showed a positive trend, with a gradually reducing deficit. The only comments she can remember CW making about the Scheme were throwaway comments along the lines that the deficit should improve over time as members pass away and that, should the membership get sufficiently low, there might be an opportunity to buy them out of the Scheme. Neither of these items was ever discussed in detail. She says that she had no experience of company pension schemes as her only business knowledge had been gained within Tressanda, a small limited company with no pension scheme other than a statutory workplace pension scheme introduced in 2016. Similarly, she says that she was not aware that DFL was asking the Scheme trustees to reduce contribution levels.

On 26 February 2026 GK forwarded DFL January management accounts to AP among others, commenting “Not a nice month with sales approx. £50k behind our break-even figure.” AP agreed that she had no reason to think that that is an inaccurate statement or that these attachments were inaccurate. She commented that in the valuation, they had put in that they were expecting good sales for the year. She said this may have been a glitch or CW “massaging the figures to keep us moving along.”

Ashgates corresponded with HMRC with a view to obtaining clearances for the benefit of the shareholders of DFHL and Pink under section 701 of the Income Tax Act 2007 and section 138 of the Taxation of Chargeable Gains Act 1992. We do not have all the correspondence, but the hearing bundle contains a letter from Ashgates dated 26 February 2016, apparently responding to concerns by HMRC about CW receiving cash consideration. Ashgates proposed revisions to the proposed structure under which “the shares in both companies that were to be gifted to [CW] by his parents will instead by (sic) gifted directly to [CW’s] adult children. [CW] will then receive shares in the acquiring companies instead of receiving any cash consideration. [CW’s] children will then be given the choice to retain their shares or to sell some or all of them to the acquiring company at the same price as the other shareholders”.

AP received £360,437 in exchange for selling her shares in DFHL to Ash 160 Limited (“Ash 160”), subsequently renamed Discovery Flexibles Group Limited ("DFG"), an entity itself then owned by CW and his wife. The Panel noted that the available evidence was not conclusive as to when this money was received, but the Case Panel considered the reasonable course on the evidence to be to treat the sums as having been received on 1 April 2016. Of this total, £87,379 was received for the shares gifted by her parents as part of the sale process on the understanding that following receipt of the cash for those shares AP would gift the money on to her children. The remaining £273,058 was received in return for the shares she had held for some years.

On 17 March CW forwarded to AP the February 2016 management accounts of DFL prepared by GK. This showed a loss of £20.4k. DFL was £473k behind on sales compared to the previous year and was showing a loss of £206k in the year to date.

On 27 April AP was forwarded the March management accounts, which showed a net loss of £81.5k in the month (£287k in the year to date with sales £600k down on the year before).

On 2 June 2016 AP emailed CW to say that she had spoken to Mr Newborough and her understanding was that there was no reason for her not to stand down as a Director of AF Reprographics (“AFR”). She commented, “As I have no involvement in AF I feel I am more open to being accused of failing in my directorial duties if I stay on as a director than being accused of any wrong doing if I step down so I would really like to be removed as a director as soon as possible.” When asked by Mr Robinson, she said that she did not understand what directors’ duties she was referring to; she just knew she was not performing any of them as she was not acting as a director.

Mr Robinson showed AP an email dated 19 August 2016 from CW to GK instructing him to record the loan from DFL to Pink as having been repaid on 23 March and a loan of £800,000 made by DFL to DFG on the same day. AP says that she did not know anything about this at the time.

As regards DFL’s financial position, AP says that all the information supplied to the shareholders in the 3 years leading up to the sale of DFHL gave the impression that the company was, whilst having the occasional testing time and hurdles to negotiate (as all companies do), in a stable and improving financial position. As shareholders, they had been given no cause for concern with regards to the profitability of the company over the previous four years. In fact, they were asked to approve substantial bonuses for the DFL management for 2011-2014.

In the published accounts for the years ending 2012, 2013 and 2014 DFL was profitable (once the exceptional costs relating to redundancies are removed from the 2014 figures) and there was a strong improvement in its cash flow. Mr Robinson took AP to financial information on DFL in the Warning Notice. This showed sales declining (from £14.7m in 2011 to £10.4m in 2014). Profit before tax rose from £0.04m in 2011 to £0.2m in 2012, £0.3m in 2013 and a loss of £0.04m in 2014. Net assets rose from £1.4m in 2011 to £2.3m in 2014. In 2015 they rose to £5.8m because the directors decided to recognise a deferred tax asset of £3.4m. The 2015 accounts were not published (or shown to AP, PW or her father) until after the sale. AP considered that the fact that the 2015 accounts were delayed until after the sale might indicate that CW was trying to hide the increase in net assets from £2.3m to £5.8m. She suspects that CW thought that if the rest of the family knew the true value of the company, they would not have agreed to the sale price of £1.1m. AP agreed that the £800k cash drawn down from RBS would be about a third of the 2014 net assets.

Mr Robinson questioned AP at some length about how she thought Pink (and then DFG) would repay the loan from DFL. AP described this as CW “taking his salary in the form of dividends and therefore using it that way” or selling the shares in the company. She said the family’s expectation was that CW was buying the DFL shares to make a profit.

AP says that she did not try to speed up the transaction. Indeed, she queried whether it might have been better to split the transaction into two halves and straddle two tax years. That would have delayed some of the sale. She says that her main concern was that the transaction was done correctly, that the shareholders got the clearances Ashgates said were needed and that “everything was done legally and above board”.

On 15 February 2019 the entire issued share capital of DFG, the owner of DFHL, was sold to a management buyout vehicle Pack34 Ltd (“Pack34”). At the time DFG still owed £800,000 to DFL. Similarly, the RBS invoice financing facility used by DFL and referred to above remained in a debit balance of at least £800,000. Subsequently, the loan between DFL and DFG was written off.