Ludo Ltd: what I’ve learnt as a one-man corporation

I am a boss. I don’t mean that in a power-of-positive-thinking way. The celebrity hair stylist and self-help guru Tabatha Coffey’s book Own It! Be the Boss of Your Own Life — At Home and in the Workplace is no use to me. For I am the boss of my workplace, which also happens to be my home.

L Hunter-Tilney & Co Ltd is my company. It was incorporated in February 2007, just in time to help British business weather the great recession. In the terminology of Her Majesty’s Revenue & Customs, my private limited company provides “news agency activities”. I am the owner of 100 shares priced at £1 each, a token sum I find rather unsettling. The idea a corporate rival could attempt a hostile takeover with a single trip to the cashpoint is not encouraging.

I set up my company on the advice of my accountant. Until then, as the FT’s pop critic but without a staff position, I had been categorised as self-employed. Incorporation was like stepping through the looking-glass. I became the director of L Hunter-Tilney & Co Ltd, a name I picked in the spirit of maximum dullness. My wife agreed to step up to the plate as co-director. I double as company secretary. I’ve got a feeling I’m meant to hold an annual general meeting, where my co-director could raise any issues she has with my stewardship. But (don’t tell the tax man) we have never had one. In this one area of our household, my bossing goes unquestioned.

My company is celebrating its 10th anniversary. It is unusually long-lived: less than half the other businesses formed in 2007 were alive five years later. According to Darwinian economics, L Hunter-Tilney & Co Ltd has evolved into a lethal predator stalking the savannah of “news agency activities”. But in truth it doesn’t feel that way when I’m struggling to think of a witty intro to a Justin Bieber review while helping get the kids ready for school. So what sort of a corporate animal am I? Armed with a tax-deductible reporter’s notebook and a set of questions, I set out to find out.

1. How many businesses are there?

According to the Department for Business Energy and Industrial Strategy’s annual business population report, there were a record number of 5.5m private sector businesses in Britain at the start of 2016. The total is 100,000 more than a year earlier, and 2m more than at the turn of the millennium. There is a huge business boom under way.

Such is the rate of growth that the gap between the numbers of businesses and babies being created in Britain is shrinking fast. There were 608,000 start-ups in 2015, according to lobby group the Centre for Entrepreneurs, an increase of almost 5 per cent on 2014. The same year 770,000 British babies were born, an annual drop of 6,000. If corporate Britain continues to spawn with such promiscuous abandon and biological Britain continues to dwindle, we should expect business births to overtake human births by 2020.

2. What is the benefit of forming a business?

One morning, as UK plc goes about its business, I pay a visit to the longest surviving registered company in England and Wales. The Ashford Cattle Market Company Ltd was incorporated in 1856. According to Companies House, which has been registering British companies since 1844, the livestock market is the oldest on its books still trading.

Sales are brisk when I arrive at its premises, an industrial estate on the outskirts of Ashford, Kent. About 100 farmers and agricultural workers either stand or sit in an amphitheatre-style indoor space. Sheep are herded into the central ring, accompanied by a rapid recital of prices from the auctioneer. A breeder interprets the figures for me: each is going for about £55. I try not to catch the auctioneer’s attention by nodding too vigorously. L Hunter-Tilney & Co Ltd has no intention of adding a flock of Hampshire Cross ewes to its assets.

Ashford Cattle Market was created to replace the town’s medieval market. “A group of farmers got together and decided it could be organised better,” says Roger Lightfoot, chief executive of Hobbs Parker, the auctioneer that manages the market. The Limited Liability Act of 1855, the year before the cattle market’s incorporation, was crucial. It established that a shareholder in a limited company like mine could not be held personally liable for its debts. The aim was to encourage people to set up businesses. By creating Ashford Cattle Market, the founders, some of whose descendants are still shareholders, reduced their exposure to risk.

In my case, limited liability protects me from ruin if L Hunter-Tilney & Co Ltd collapses. Despite our names being entwined, it exists independently from me. It has its own“legal personality”.

Limited companies are one of three main types of business in Britain. The others are sole traders and partnerships, neither of which have limited liability. They form the majority of the 5.5m private enterprises. But each is shrinking, while limited companies are growing: up by 125,000 in 2015.

Ludovic Hunter-Tilney working in the park
Ludovic Hunter-Tilney working in the park © Greg Funnell

3. Has Britain gone from a nation of shopkeepers to a nation of start-ups?

“It’s a question of what kind of entrepreneurial culture you have,” says Geoffrey G Jones, the British-born Isidor Straus professor of business history at Harvard Business School. “Do you have a Silicon Valley-style entrepreneurial culture where amazing things are done? Or do you have an entrepreneurial culture like Thailand or Jamaica where you have lots of people trying to do little jobs and get by? There’s not one entrepreneurial culture in terms of its impact even though they can often be put under the same umbrella.” Professor Jones’s predecessor at Harvard Business School was Alfred D Chandler, author of the 1977 classic The Visible Hand, the first business title to win the Pulitzer Prize. It argued the emergence of large, well-managed corporations in the US in the 19th century was the single most important factor in modern economic history.

“There you have a big thesis about how the US and the western world got rich,” Jones explains. “It’s because they developed commercial organisations which spread out from the cities to the regions to the country to the world diffusing innovations. As a business historian, I think the firm is at the centre of world creation.”

That sounds pretty good to me — a heroic conception of L Hunter-Tilney & Co Ltd’s output of reviews and features. But there is a catch. The majority of the 5.5m private sector businesses operating in the UK do not employ anyone but their owner, as in my case. The biggest sector is construction with almost 1m businesses. It hardly resembles the handful of big, efficient companies that Chandler wrote about.

“I look at those numbers and I partly see a shrinking core labour force and its replacement by millions of people with their own businesses,” Jones says. “Many are not generating the new Facebook or the next breakthrough in cancer treatment. Nearly a fifth are trying to repair or rebuild the housing stock in Britain. Are they the future Chandlerian innovators? It doesn’t look like it.”

4. Does big mean better?

The use of big business as a pejorative term began in the 19th century. Today it has become commonplace. In her first conference speech as UK prime minister last year, Theresa May described the Conservative party as “the party of businesses large and small”, before rounding on the former, complaining that “big business” was not being held accountable for its actions. “A change has got to come,” she declared.

“There’s a sense in which people don’t expect businesses to behave well any more,” says Steve Tombs, professor of criminology at the Open University. “When HSBC is being investigated for everything from money-laundering to sanctions-busting to foreign exchange-rigging — these things are such regular occurrences the population just gets inured. It’s expected that businesses will behave immorally or amorally.”

Tombs is co-author of the pungently titled book The Corporate Criminal: Why Corporations Must Be Abolished. “Corporate rights are out of control,” he tells me, highlighting limited liability as an example — the very mechanism that would protect me from penury if I were sued by the outraged recipient of a one-star review. My protectiveness towards plucky little L Hunter-Tilney & Co Ltd is roused. Should my corporate alter ego be abolished too?

“Of course that’s a ridiculous subtitle, ‘Why the corporation should be abolished’, it’s provocative,” Tombs concedes. “But it’s also designed to say that if we stop thinking of the corporation as a natural entity, the only way of providing goods and services, we could think more creatively. If we free ourselves of thinking that the private corporation is the only way of producing things, then we can look to alternatives.”

At Harvard Business School, Jones has noted a change in attitudes among his MBA students. “They’re rich, successful people but there’s a great disillusionment with what is established, whether it is government or business. And there is quite a strong feeling that they want to do something good for the world. They want to make a difference rather than just get the salary. I think there is this millennial generation that is very aware that something has gone wrong with the world and is cynical that big business as we know can be part of the solution.”

5. Do small businesses deserve their good press?

In contrast to big business, small businesses enjoy a positive reputation. They are viewed as plucky entrepreneurs, the “strivers” and “wealth-creators” upon whom the future wellbeing of the nation is built. For a politician, insulting a small-business owner is like pulling a face when you kiss a baby — a political no-no. Yet in the Budget last month, the Chancellor of the Exchequer Philip Hammond did exactly that. His aim was to address a tax gap between employees and the self-employed. According to the Institute For Fiscal Studies, someone paid £40,000 annually would receive £32,294 as a private limited company owner. A person who was a sole trader would receive £31,180. Meanwhile a member of staff would receive £27,738.

Hammond’s plan was to raise national insurance contributions from sole traders and tax more highly the dividends that company owners like me pay ourselves. The backlash was instant. “We call on our army of white van-driving readers to back our demand he scrap a £240 National Insurance rise,” tabloid newspaper The Sun declared. The chancellor duly caved in, cancelling the national insurance rise amid acute political embarrassment.

His mistake was to treat Britain’s millions of small businesses as the same. It was a rational error; after all, companies of all sizes face the same UK corporation tax of 20 per cent, whether its L Hunter-Tilney & Co Ltd or the Financial Times Ltd. But the attempt to tidy up business tax rates even further ignored a simple truth of economic life. As Professor Jones says: “Businesses are not homogenous. They do different things and have different impacts on an economy.”

The Sun’s “white van man” is one of the great stereotypes of British small business, a self-employed tradesman manoeuvring his commercial vehicle at speed around the roads of UK plc. Another is the “start-up founder”, a term with an exotic frisson of Silicon Valley to it, something far-sighted and potentially very lucrative in technology. The “mumpreneur” runs her own business while raising her brood, juggling spreadsheets and toddlers’ toys. The notion of the “family-run” company sums up the warm glow that envelops small businesses — even though that description can apply as much to Walmart as John Doe and Sons Ltd.

But there is one small business sector that struggles to command popular support. Regrettably, I inhabit it. While Hammond rowed back on the national insurance contributions for sole traders and partnerships, he has kept the dividend tax rise for owners of limited companies. The Sun has yet to leap to my defence.

6 Am I a tax dodger?

As the boss of L Hunter-Tilney & Co Ltd, a common reaction I have encountered is not admiration at my wealth-generating work for the national good but rather an assumption that I am engaged in some kind of tax chicanery. “You and Philip Green both!” my own mother felt compelled to remark, complete with viperish laugh.

I admit I felt squeamish when my accountant first proposed the idea of incorporation 10 years ago. Paying myself a small salary and supplementing it with dividends struck me as a rather rum state of affairs; as in Cayman rum. (I should point out here that my recently retired accountant is about as upright as they come, a Surrey county cricket supporting grandfather who worked in a modest office in south London, not Monte Carlo.)

But my unease faded. The tax savings compensate for the various entitlements of full-time employment that I don’t receive — pension contributions, sick pay, holiday pay. Limited liability is a protection against Britain’s stringent libel laws. Taken all together, it is a kind of state insurance for the risks I have assumed in managing my work. Without these benefits, I would be in a precarious position.

Uber drivers protesting in London
Uber drivers protesting in London © Bloomberg

7. Are we living in the past?

Technological transformation of jobs is widely recognised: we talk of the “gig economy” or the “Uber economy”, a world of on-demand work with uncertain rights. But it is less noticed that traditional notions of what a business is and does are crumbling at the same time.

There is a view that the self-employment rise is the result of the failure of the labour market and if only the economy would recover these people would get back into large firms and permanent jobs,” says Matt Smith of London-based pressure group the Centre of Entrepreneurs. “But I believe the shift towards self-employment and one-man businesses is a reflection of the changing nature of employment.”

Harvard Business School’s Professor Jones agrees. “There are unprecedented opportunities for people to pursue entrepreneurship and to manage their careers in ways that no longer require the large infrastructure of a company,” he says. “You can be part of a global world now without being part of an organisation.”

L Hunter-Tilney & Co Ltd is an entity with its own legal personality and set of rights and duties. It is my working self, the corporate doppelgänger of the unshaven critic in a dressing-gown hammering out reviews on a grimy keyboard in the converted loft of a Victorian terraced house. Perhaps one day everybody will have one.

Photograph: Greg Funnell; Bloomberg

Letter in response to this article:

Never meet your heroes / From Catherine Flanagan


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