An idea brought forward in an East Yorkshire garden outbuilding to solve a construction headache has now become a £1.6 billion business as it prepares to mark 25 years of trading.
Hudson Contract was a direct response to a HMRC challenge to the hard-hat sector’s ‘subbie reliance’, balancing tax take with the need for a flexible workforce.
And despite an early but protracted challenge to the justification of the service from the government agency - now the biggest promotional tool - the founder is looking forward to seeing what the next quarter of a century brings.
The son of a Bridlington milkman, Dave Jackson had his own modest building business and Hull-based construction employment agency in the mid Nineties.
A university graduate and qualified draughtsman, he opted for a more physical job to build himself up after successful chemotherapy, having contracted Hodgkin’s disease as a young adult.
So how did he become the chairman of one of the biggest regional companies many will have never heard of?
“It is a pretty unusual business, it doesn’t fit in a box,” he said of the status. “It is business-to-business, it is in the construction sector. We saw a need for outsourcing of a role and responsibility. The role is that of workplace audits to correctly determine employment status. Thereafter it is contractual responsibility to contract services of freelance builders to work on building sites.
“We’re not lawyers, we’re not accountants, it is not purely payroll. We’ve found a niche.”
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That niche sits with the Construction Industry Scheme - and if you Google it, Hudson’s is the answer provided.
An example of the issue manifesting is when a contractor engages with a bricklaying gang, and one job moves to the next and the next. “They get on well, both parties are happy with the quality and happy with rates of pay, and suddenly three years down the line they are classed as employees, and a tax bill is looming, and it goes back to the start too,” Mr Jackson said.
He saw it on the frontline, acutely aware of the fluctuating workforce requirements of a cyclical and project-based sector. When approached by a contractor with a flyer from HMRC - asking ‘are your subbies your employees’ - it was remarked that whoever could solve that issue would be on to a winner.
Mr Jackson has certainly won, and from a coastal office in a hometown he is proud of, a team of 35 in ‘Brid’ and employees in the field and other locations nationwide look after 2,500 businesses and 72,000 tradespeople.
But it very nearly didn’t get from foundation level. A cursory visit from an inspector instigated a legal battle that ended up with a successful appeal - an issue that never dimmed the “entrepreneurial light bulb moment” that launched.
“I managed, in the first 18 to 20 months to create a strong regional presence, but when the Inland Revenue disagrees with your business model, and it takes eight years to overcome their difference of opinions, it is hard,” he said.
Mr Jackson had, however, retained his building business. “We never stopped trading, we had a clientbase - we went down to about eight clients - during the argument being heard. About six years into the argument we had the decision in our favour to justify the business model, and we realised it was time to push on and reach new clients. We went from the region, to the North of England, and it was when I was including Essex we realised we’d become a national business. We’d gained real momentum.”
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Wider legislation changes have brought challenges, but they have been overcome.
“We have had our argument days, and left them behind, we’ve had acceptance from the Inland Revenue for what we do in the end, in 2007,” he said - with his tax-specialist barrister remaining a great friend.
Could it have stopped him in his tracks? Lesser men probably so. “I never thought it was not worth the hassle, it is always worth the hassle,” he said. “My main worry was the solution could be an eternity away. It certainly is when you pick an argument with HMRC. They know how to play the long game.
“I had a strong sense that we were right, that we were standing on the right side of the interpretation of tax law and to be told we weren’t was not good enough, and had to be challenged. In the end it became known to us that assumptions that we were an employment business were based on notes taken on two very small pieces of notepad paper from that first meeting.”
The key pieces of paper now are the rulings, and subsequent case law - way more than the “12 lines” Mr Jackson feels nearly did for Hudson.
“What it all comes down to now, is when we started to attract more business, we did so partly because of what we offered, but we could put case law in our own name on the table. People can take issue with what you say, but what courts have determined is now our USP. We may be in a field of 100 but we are in a class of one.”
Being described as lawful, proper and ethical as part of the final hearing was quite a feather in the cap too.
Looking ahead, three direct family members are in the business, but all are treated as one - though wife and co-owner Lesley comes in for particular praise.
"Whatever we have achieved at Hudson Contract, I couldn’t have made much of a success of it without her support and encouragement," he said. "Yes, we get to share the rewards of our success together, but we’ve also shared the sleepless nights and the endless engagement with challenges in the past. It’s a great and enduring partnership."
Of the wider 'family', he said: "I take it very personally that employment should be as secure as I can possibly make it. We’ve had policies in place throughout Covid and as the construction industry has largely sayed at work - 85 per cent to 90 per cent I would say. We’ve recently had a pay review and put everyone up. We work as a family and I cannot think of a better way of supporting it.”
It isn’t just his ‘family’ that is being helped either. Hudson funds an apprenticeship scheme for small construction businesses - many working out of vans as sole traders or tight teams.
It is coming up to a decade with half the wages of 170 apprentices covered.
He has strong links with the local college now, but started by suggesting young lads sat outside a builders’ merchant on a Saturday with a letter of guarantee from him.
“In and around Bridlington there are no construction companies bigger than a dozen employees, most are one or two-man companies, operating from a van,” he said.
“Getting an apprenticeship is difficult. It was a question of what we could come up with and it was a very simplistic approach. But if we have proof of apprenticeship and college attendance, we pay half the wages.”
Brutally honest - a clear trait - Mr Jackson tells how a third do drop out, but many have gone on to freelance. Three went to Australia as a brickie and carpentry team and two started their own businesses.
“Our whole intention was to keep it local; it is not easy to create new work opportunities in a seaside town, especially opportunities that have a three year requirement to qualify,” he said. “A trade is a skill for life, and it is a good thing to commit to. I was born and brought up in Brid.
"The success of Hudson affords me the chance to put something back in the community. It is not for a big headline or to appear clever, I just look around and there aren’t the opportunities. We’re not a thriving industrial heartland or commercial centre, but out there is a college with places for students with an apprenticeship.”
Another on the payroll is the town rugby team’s youth development officer - with a car to get round schools too, as he hopes the next generation indulge in what became a late passion for him as a spectator.
While he has “no intention to retire” the past seven years have seen him in the role of executive chairman.
“I want to stay as chair, where I have freedom to come and go as I feel, and can pick things up that I want to pick up,” he said. “There’s no day-to-day responsibility, but an overarching responsibility of a different kind. We had an MD in waiting in 2014, and there was no point in holding him or us back.
“Now we’re at 25 years and it is an interesting time to look about - there are bound to be challenges with legislative changes, and I don’t think we have quite fulfilled our market potential. There’s growth to be had still, and I aim to keep going - I enjoy it.”