Accountants for Construction
Accountants for UK construction businesses, contractors and subcontractors, covering CIS, the domestic reverse charge and project margin.
How we help
Construction carries two compliance regimes that exist nowhere else, and both punish administrative error rather than bad intent. Getting CIS and the reverse charge right is most of what a construction accountant does.
The Construction Industry Scheme
Under CIS, contractors deduct tax at source from subcontractor payments and pay it to HMRC: 20% for registered subcontractors, 30% for unverified ones, with gross payment status available to those who qualify. Contractors must verify every subcontractor, file monthly returns and issue payment and deduction statements, and the monthly filing deadline carries penalties that escalate quickly for a scheme with few payments.
Subcontractors are on the other side of the same problem: deductions suffered have to be reclaimed correctly, and for limited companies that runs through the payroll scheme rather than the corporation tax return, which is where refunds most often go missing. See our CIS compliance refresher.
The VAT domestic reverse charge
For most standard and reduced-rated construction services between VAT-registered businesses within CIS, the customer accounts for the VAT rather than the supplier. It does not apply to end users or intermediary suppliers, or to zero-rated work, so the same firm can be inside it on one contract and outside it on another.
The practical effect is a cash-flow change for subcontractors who previously held VAT between collection and payment, and invoices must carry specific wording. Our guide to the domestic reverse charge, five years in covers where it still goes wrong.
Gross payment status
Gross payment status removes deductions at source and transforms working capital for a growing subcontractor. It requires passing business, turnover and compliance tests, and it can be withdrawn for late filings or payments, so protecting it is an ongoing discipline rather than a one-off application.
Knowing which jobs made money
Construction businesses frequently know their annual profit and not their profit by contract. Costing labour, materials, plant and subcontractors to each job, and tracking retentions and work in progress, is what tells you which type of work to bid for. Retentions in particular distort both profit and cash if they are not tracked separately.
What we do for construction
CIS verification, monthly returns and statements, VAT under the reverse charge, payroll for direct staff, year-end accounts, and contract-level reporting so you can see margin by job.
Frequently asked questions
What rate do I deduct under CIS?
Twenty per cent for verified, registered subcontractors and thirty per cent for those who cannot be verified. Subcontractors with gross payment status are paid without deduction.
Do I need to file CIS returns every month?
Yes, if you are a contractor making payments under the scheme, and the penalties for late filing escalate quickly even where few payments were made.
When does the VAT domestic reverse charge apply?
To most standard and reduced-rated construction services between VAT-registered businesses within CIS. It does not apply to end users, intermediary suppliers or zero-rated work.
How do I reclaim CIS deductions as a limited company?
Through your payroll scheme rather than your corporation tax return. This is the most common place we find refunds sitting unclaimed.
What is gross payment status and can I get it?
It allows you to be paid without deduction, which transforms working capital. It requires passing business, turnover and compliance tests, and can be withdrawn for late filing.
Can you tell me which jobs are profitable?
Yes, by costing labour, materials, plant and subcontractors to each contract and tracking retentions and work in progress separately from headline profit.
Looking for construction specialists?
Book a free consultation and we will tell you honestly whether we can improve on what you have.