No wonder he thinks demand curves slope upwards

Quite stunning really

To which is appended the comment:

In 2000 there was one company for every 37 people (near enough) in the UK.

Now the number is one for just under 17 people. The number of companies per head of population has doubled this century.

Corporatisation is rampant.

Data is from Companies House and the ONS.

Note that this is excerpted from academic research by someone called a Professor in a modern British university.

He’s got it the wrong way around of course.

Now, anyone can be in error, Lord Knows I’ve been known to make the occasional or more booboo. But it was actually pointed out to him:

dave rigden says:
May 14 2018 at 7:40 am
respectful suggestion- think your title should be heads/company ie reversed

Reply
Richard Murphy says:
May 14 2018 at 8:26 am
No

The number of companies has doubled

Reply

Sigh.

42 comments on “No wonder he thinks demand curves slope upwards

  1. Yes, we know he cannot read a graph and that if there is a single correct conclusion to draw he’ll choose the opposite. Not because he is contrary but simply from his own madness not accepting the reality that others inhabit.

  2. The title of the graph and the title of the Y axis make the whole thing impossible to interpret, for me, anyway. But then I’m not a professor.

  3. From a 1st hand account in the past month.

    HMC&R are now mandating that directors of small companies must sign a covenant to personally guarantee all tax owed (PAYE, both sets of NI, VAT and Corp Tax) before they will be permitted to trade……

    This is their response to having their status as a preferential creditor removed.

    A bad debtor or two and The Revenue will bankrupt you personally as a consequence…..

    So much for the protection of limited liability.

    Not withstanding the unaccountable Henry VIII power to demand pre-payment of corporation tax in advance of the year end, which will completely screw up cash flow, and if you over pay you may or may not get a refund for 9-12 months after the year end.

    One wonders why company formation is falling and why people are not willing to take risks and start their own business.

    This is what happens when lazy politicians hand administrative powers to bureaucrats.

  4. getjpi

    HMC&R are now mandating that directors of small companies must sign a covenant to personally guarantee all tax owed (PAYE, both sets of NI, VAT and Corp Tax) before they will be permitted to trade……

    What? Got any evidence for that? Unless you’re spoofing (‘HMC&R’)..!?

    One wonders why company formation is falling and why people are not willing to take risks and start their own business.

    Err, you may be reading the graph wrongly..:)

  5. @PF you’ll find that HMG itself describes the former inland revenue using those two words in either order.

    Not a spoof. Family member attempting to establish a trading company with ~100k of his own capital, has been stymied at every turn. They even went as far as hitting him with a tax investigation 3 weeks ago. Tax investigation insurance works……. They went back ten years and found nothing, he got a refund.

    It’s completely fcked up, the process is the punishment

  6. Apart from enjoying Capt. Potatoe’s allergic reaction to correction, what is the point or conceivable use of measuring the number of companies against the size of the population each of which number might be interesting or informative in its own right.

    This farrago must hold special appeal for an obnoxious obscurantist but it leaves me cold. Rampant corporatism bosh!

  7. The graph doesn’t make sense. How can there be 37 companies per capita? 65 million people gives 2.5 billion companies. Per 1000 people might give a sensible answer.

    Capita per company would seem more reasonable, but that isn’t what the graph shows.

  8. Raffles

    Capita per company would seem more reasonable, but that isn’t what the graph shows.

    Yes it does – it clearly says “People” on the left hand axis. There is no other reasonable interpretation, ie, it’s the title that’s nonsense..

  9. getjpi

    @PF you’ll find that HMG itself describes the former inland revenue using those two words in either order.

    I just did a quick search on ‘HMC&R’ – nothing popped up – your googling skills are clearly loads better than mine..:)

    Family member attempting to establish a trading company with ~100k of his own capital, has been stymied at every turn. They even went as far as hitting him with a tax investigation 3 weeks ago. Tax investigation insurance works……. They went back ten years and found nothing, he got a refund.

    Slightly confused. This sounds like, on the one hand, a new company; and then separately an investigation into an old or existing company / business? Two separate issues?

    Setting up a new company now is straight onto Companies House – it takes no time, and it’s done. I wasn’t aware that HMRC at that point had any legal ability to disallow such an entity from buying or selling stuff (ie “trade”)?

    Sounds like they’ve had a few problems whatever, and maybe you and I are simply using different terminology.

  10. “It’s completely fcked up, the process is the punishment”

    Maybe I’ve misunderstood, and this is the point you’re making, and in which case, sure, I understand.

  11. Looking forward to the Professor showing us graphs of People per GDP and working out his expenses in miles per penny and gallons per mile.

  12. Looking forward to the Professor showing us graphs of People per GDP and working out his expenses in miles per penny and gallons per mile.

    Most of Europe measure fuel economy in l/100km!

  13. Ritchie now says “NB: Some people did not like the labelling of the original chart: it has been amended for the sake of clarity”

    You see, it’s all your fault for reading it wrong, but he’s kindly changed it so the plebs can understand.

  14. As a company director I’ve not come across the idea of personal liability for company debts except on investigation.

    Sounds like your relative is well known to cause problems for HMRC and they are taking steps to cover Perhaps has crashed a half dozen companies?. Or else banned from being a director.
    For everyone else it appears limited liability as normal.

  15. @PF

    https://bit.ly/2IkuDew

    “Setting up a new company now is straight onto Companies House – it takes no time, and it’s done. I wasn’t aware that HMRC at that point had any legal ability to disallow such an entity from buying or selling stuff (ie “trade”)?”

    That’s the theory, they can and do have the power to deny vat registration. Which pretty much kills a trading company operating B2B. They made vat registration contingent on he providing a personal guarantee for the new companies tax debts.

    When he challenged it, he was subjected to a personal tax investigation. Never had any issues with the revenue before.

    According to the forensic accountant assigned by his insurance company, this is not uncommon. Tax law is being rewritten on the fly without recourse to parliament on a monthly basis. For the sake of their administrative convenience, they want to make it as hard as possible to work outside of paye.

  16. @martin

    It’s the first time he has set up a company.
    Been a sole trader for the past 15 years.
    They have nothing on him, ironically the results of their personal tax audit going back ten years refunded 4k in overpaid taxes. Not what the inspector expected.

  17. He really is as thick as mince.

    Also, why is one company per 17 people a bad thing? Are fewer but much larger corporations better? If so, in what way?

    His blunderings into even basic mathematics are hilariously inept. It’s almost self-parody.

  18. Every time a new company is formed, you need to create 17 new people too?

    Doesn’t the graph show a move away from big corporatism and towards more smaller businesses?

    I think we should be told!

  19. aaa: making new people is firstly more fun than making a new company, and secondly something that any straight and many gay persons can aspire to do.Making a company has the potential to make you richer, but possibly poorer: making new people mostly makes you poorer, unless you are on benefits …

  20. One has to hope for the sake of his students that he is not involved in setting any course exams or marking them.

  21. Obviously, we both need to stamp out entrepreneurialism and encourage a few mergers and acquisitions until we obtain an optimum ratio of people to companies. We should probably also discourage small firms from incorporating and instead require them to remain as proprietorships or partnerships. That should also help with the stats.

  22. His definition of corporatism appears somewhat at variance with the usual one.
    Corporatism is usually regarded as large companies profiting from government favours instead of from great products. The more companies there are the less likely this is to happen.

  23. @BiL – Noel suggested doing things backwards, I was simply pointing out that depends on what you consider normal.

    No great philosophy intended, just joking around.

  24. Rob – Enjoyed this!!

    ‘He really is as thick as mince.

    Also, why is one company per 17 people a bad thing? Are fewer but much larger corporations better? If so, in what way?

    His blunderings into even basic mathematics are hilariously inept. It’s almost self-parody.’

    I have often said the recently revitalised Murphy Richards, although performing a great public service is largely rendered redundant by the witterings of the real deal. To answer your second point I imagine for him there is only one Company permissible – the Curajus state and anything else ‘outside democratic control’ is ‘likely to be dangerous’.

  25. getjpi – ah you didn’t mention vat registration.

    Not that it appears to make much difference for personal guarantee issue.
    That’s a millstone – what is the point of having a limited company if the most likely creditor has a personal guarantee anyway?

  26. getjpi–Surely the HMRC cunts would be wide-open for a whole slew of legal challenges.

    After all make-it-up-as-you-go-along laws are a direct challenge to the livelihood of lawdogs.

  27. @getjpi, May 14, 2018 at 10:55 am

    From a 1st hand account in the past month.

    HMC&R are now mandating that directors of small companies must sign a covenant to personally guarantee all tax owed (PAYE, both sets of NI, VAT and Corp Tax) before they will be permitted to trade……

    This is their response to having their status as a preferential creditor removed…

    I wasn’t aware of this, do you have any links?

    Are HMRC applying it retrospectively too?

    Thanks

  28. HMRC can require payment of a security for VAT or PAYE if you are on their ‘serious risk of default’ list.

    You have to have been a naughty boy to get on it. Usually defaulting on big chunks of tax owed.

    Getpi’s family member has been up to no good in the past and all the anecdotal tales he might tell Getpi won’t change that.

    I’d bet a big wodge of cash that’s the background.

  29. Elsewhere in Getpji’s missmash of the facts, HMRC lost preferential creditor status over a decade ago so nothing recent is because of that.

    And the only companies paying tax before the year end are those making huge profits. You need to be making at least £1.5m p.a. profit before you enter the instalment regime. And you get to calculate those payments yourself.

    Getjpi. Stop listening to idle ill-informed gossip. Certainly stop repeating it.

  30. “They even went as far as hitting him with a tax investigation in 3 weeks? And paid out a refund in that time?

    I’ve seen more plausible story lines in one of Rocco’s movies.

    They’d be more likely to take 10 years to look back 3 weeks.

  31. One wonders if her realises how impractical it is to get rid of companies.

    I’ve had this issue come up several times recently: it is trivial to stick a new holding company over the top of an existing company, and in fact is pretty much required in many cases in order to avoid incurring a dry tax charge. There is a specific tax relief in place to ensure that this sort of thing can be done.

    However, to remove a useless holding company usually results in a significant tax charge, because there is no corresponding relief in this direction.

    In fact, in the course of advising someone last week I pointed out the reductio ad absurdum that if one were to create a new holding company and then immediately liquidate it, you would get a tax charge despite there being absolutely no economic effect.

    So the tax system has a ratchet effect: it pretty much requires that new companies are created faster than they can be destroyed.

    If s127 TCGA could be applied in a liquidation, I would personally be involved in the destruction of dozens if not hundreds of pointless companies in the very short term.

  32. “Official figures are here:”

    You mean Richard is wasting EU grant support money to draw Excel graphs of data he’s researched that Parliament has already published? Brilliant.

  33. Chris, numbers from the BIS, (2013 I think) show nearly 5m businesses employing just over 24m people; so average headcount would be about 5. But ~73% of those businesses only employ one person – the owner, so its roughly 1.6m employing 21m, so average headcount in those firms would be around 16. From memory, UK employment is skewed towards much larger firms (compared to the mittelstand in Germany), so it seems likely that an awful lot of those 1.6m firms would be employing 5-10 people, with relatively few in the many tens, and even fewer in the many hundreds.

    Yeah, growth in self-employment. But there’s an awful lot of contractors, or PSCs, that have to incorporate in order to deal with clients, or to get the VAT number so that the client can claim it back.

    Anecdata, but depending on personal circumstances, it’s really quite easy to start a small business that generates a decent-ish level of income, after costs and allowances. But it’s a right bastard to grow it, particularly if you suddenly start to get close to the VAT threshold, which can fuck your cashflow right up overnight.

    It seems highly likely to me that the majority of those 73%, about 3m businesses, are B2B, not B2C, in which case I fail to see why the number of firms per head of population is relevant.

  34. Chris/DM

    Probably already aware, but Chris’s link is “all businesses”, including unincorporated traders, not just companies (which is Murf’s graph)? Co House have useful data on totals for company numbers, and including those that are dormant (included in Murf’s totals).

  35. PF,

    Sure, although the (my) number (16 employees) is in the right ball park, that quick calculation returns FTE roles, so ignores part-timers. And there are certainly differences in the definitions.

  36. There’s another big factor in those numbers. I’ve just been listening to the founder of the company that produced this app:

    Caribu is an education platform that helps parents, extended family, and mentors read and draw with children when they’re not together. We’re FaceTime meets Kindle, for kids. The result is an engaging livestream shared-screen experience – in a carefully designed, curated, and secure platform. An in-app bookstore contains hundreds of books, in six languages, from leading children’s publishers, and many educational workbooks with an interactive drawing overlay.
    Core Features:
    Drawing on books with multiple colors in real-time
    Video-Calling
    Audio-only fallback when user is in low-bandwidth area
    Story guide pointer in real-time to follow along in the book
    Magnifying tool to zoom in on small text
    https://caribu.co/press#aboutus

    make a pitch* to four investors. She didn’t raise anything from them but they all liked it and encouraged her to think big.

    When they followed up a few weeks later she’d just about closed a funding round of $100m. She’s got a number of publishers on board, including Sesame Street, and has more lined up.

    Total number of employees in company: her plus the coder, although she did say she might be hiring four more people soon.

    You just don’t need a large number of people to build a big business nowadays, you certainly don’t need to start with $500m to build a factory and then another $100m to employ 100s of drone workers and provide working capital while you spend 5 years trying to get cash positive, let alone start providing dividends.

    *The podcast is called The Pitch – think Dragon’s Den for grown ups.

  37. “You just don’t need a large number of people to build a big business nowadays, you certainly don’t need to start with $500m to build a factory and then another $100m to employ 100s of drone workers and provide working capital “

    Which raises the question – what did she need the $100m for?
    Are the investors looking to build a $100m moat?

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