Elizabeth Ann Pelgrave v The Pensions Regulator [2025] UKUT 00257 (TCC)

On 1st August 2025 the Upper Tribunal, Tax and Chancery Chamber (Judge Baldwin) handed down judgment in the Reference made by the Third “Target”, Ann Pelgrave, in relation to a Contribution Notice imposed upon her in connection with the Danapak Flexibles Retirement Benefits pension scheme.

The judgment is an important decision in relation to Contribution Notices generally and the various statutory tests contained in section 38 Pensions Act 2004. It includes judicial guidance and discussion on:

  • the meaning of the “party test”,
  • the “material detriment” test,
  • the “reasonableness” handbrake,
  • “time value” increases, and
  • the proper approach to the calculation of the final Contribution Notice sum, where intervening tax or third-party payments have been made.

The Regulator alleged three “Acts” against Mrs Pelgrave, and argued that those Acts constituted a “series” for the purpose of section 38 Pensions Act 2004. The Upper Tribunal found the second “Act” established (but not the first or the third).

In relation to the second Act, the Regulator argued for a Contribution Notice in the sum of £503,767. The Upper Tribunal issued a Notice in the sum of £245,749 (plus an uplift for the passage of time, calculated at 2% above base rate).

Brief Facts

The Applicant, Ann Pelgrave, was a former director of the pension scheme’s principal employer. She was also a shareholder in that company. The Regulator alleged (in relation to Act 2) that Mrs Pelgrave agreed to sell her shareholding in the knowledge that the purchase (by another Target, whom TPR settled its case against) would be funded by a loan from the principal employer itself, to a separate entity, with the funds being drawn down against the company’s banking facility.

The employer’s pension scheme was solvent but in significant deficit (approximately £26 million on a buy-out basis). A deficit repair plan was also in place.

Subsequent to Mrs Pelgrave’s sale of her shareholding and resignation as director, the loan was not repaid and was ultimately written off.

The Upper Tribunal found the word “party” in section 38 Pensions Act 2004 should bear its ordinary dictionary meaning, such that Mrs Pelgrave’s participation in the Act through agreeing to sell her shareholding and failure to object was sufficient to make her a party to it for the purposes of section 38 (see judgment, paragraphs 165-169).

Mrs Pelgrave also argued that the fact that she had paid tax upon the money received for her shareholding, and had gifted monies to her children, meant that those figures should be deducted from the Contribution Notice sum. Whilst this argument had been rejected by the Determinations Panel, it was upheld by the Upper Tribunal (see paragraphs 206-207).

Act 1 (alleged monthly extractions from the employer of £20,000, to remunerate a separate director) and Act 3 (the alleged use of employer assets to support other group companies) were found not proven. Act 1 was held on the evidence to be standard remuneration. Act 3 was found to be a commercially appropriate loan, and in any event Mrs Pelgrave obtained no benefit from it (paragraphs 213 – 217).

To read the full judgment, please click here.

Michael Uberoi and Charlotte Elves of counsel acted for the Applicant, Mrs Pelgrave.