In Germany this was common before they introduced the 'UG' which is a GmbH (limited liability company) w/o the 25000 Euro investment requirement. I know a few people who did found in the UK, it works and isn't particularly hard either (and there are companies which do the paperwork for you for relatively little money).

Now you can start a UG with a 1,- Euro investment (more like 500 Euro min because it still has to cover setup fees). Which I think has made the UK thing superfluous, just complicates things even more.