Independent years: 1998–2005 After leaving Virgin, Partridge had their accounts audited and it was discovered that the company had withheld substanti

Independent years: 1998–2005

After leaving Virgin, Partridge had their accounts audited and it was discovered that the company had withheld substantial royalty payments from them. The settlement of the accounts provided the group with much-needed cash flow, allowing Partridge and Moulding to install fully-equipped studios and work comfortably at home.

Though able to record the majority of their work themselves, they also used major commercial studios (including Abbey Road Studios in London) for some sessions. Finally released from Virgin, they formed their own label, Idea Records, and embarked on the recording of the ambitious "Apple Venus" project, a collection of the best material written during the band's dispute with Virgin. The band's initial plan had been to record a double album, featuring one disc of acoustic and orchestral songs and one of electric songs. However, financial constraints forced the band to abandon the double album plan and finish and release the first volume (rel. 1999) before completing the second (rel. 2000).

However, this did not prove to be the end of their problems. To the disappointment of fans, Dave Gregory abruptly left the band during the recording sessions for Apple Venus Volume 1 after 20 years' service. Ostensibly, this was due to "musical differences" -- Gregory was unhappy with the plan to record an album whose arrangements relied largely upon orchestral instruments and keyboards rather than guitars. What was not mentioned at the time was that the cutting back of his involvement in the new XTC recordings, (the string arrangements having been taken over by Andy Partridge), meant considerably fewer "points" in the calculation of royalties; as Gregory never wrote any songs for the band, this put a significant dent in his potential income from the album, basically reducing his payments to that of a session musician.

In the end, Gregory was credited as a session musician rather than as a band member on the finished album, as he left before it was completed. Partridge later claimed in a press interview that he and Colin were going to sack Gregory anyway because of his sullen attitude during the recordings, and that they had waited for him for six years to write the orchestral arrangements, and had finally told him that they would not let him stop the project.

Dave Gregory's contribution to the XTC sound had been immense; the technical skill of his guitar and keyboard playing, and his orchestral scoring, had facilitated a huge expansion in the group's sonic possibilities. His skills also encouraged, perhaps goaded Partridge to new heights of musicianship. It is some measure of how fond of him the XTC fanbase were that they slammed Moulding & Partridge for forcing his departure on the band's official forum — and some measure of their mutual respect for their fans and Gregory that the criticism went uncensored. The three got back together for a charity reunion of their Dukes of Stratosphear alter-egos years later, and in late 2006 Partridge revealed that he and Gregory had rekindled their friendship.

The band's next record, Wasp Star (Apple Venus Volume 2) was the guitar-heavy collection Gregory would have preferred. Partridge and Moulding then released instrumental and demo versions of the two Apple Venus albums. In October 2005, the two original albums and the demo versions of the albums were reissued together in the 4-CD Apple Box collection.

Having left Virgin, relations between XTC and their former label improved and Andy Partridge released a series of albums of demos of his songs (mainly from the Virgin years) under the title of Fuzzy Warbles beginning in 2002, on a new label imprint APE. Colin Moulding declined to contribute his demos to the series. The Fuzzy Warbles series eventually included eight volumes along with a bonus CD, Hinges.

A boxed 4-CD compilation, Coat of Many Cupboards, spanning the band's time with Virgin, was also released in 2002.