You are almost certainly a contractor and a subcontractor at the same time.
You take work from a main contractor or a developer, and you pay your own gangs, groundworkers and specialist trades to deliver it. That means CIS applies to you twice over, in both directions, and most of the trouble we see starts there.
Where builders get caught
Paying a subbie before verifying them. If you have not verified a subcontractor with HMRC, you deduct at 30%, not 20%. Get it wrong and the shortfall is yours, not theirs. HMRC will come to you for it.
Missing the 19th. The monthly CIS return deadline is the 19th. Miss it by a day and it is £100, and it escalates from there. We see builders carrying penalties that ran for months because nobody was watching the date.
The VAT reverse charge. Since March 2021, when you invoice another VAT-registered contractor for construction work, you do not charge VAT. They account for it. Plenty of builders are still adding 20% to invoices they should not be, or paying it on invoices they should have reverse charged.
Retentions. Five per cent held back for twelve or twenty-four months is normal in this trade and brutal for cash flow. It also gets accounted for badly, so profit looks better than the bank balance suggests.
Not knowing which jobs made money. This is the big one. You know the business turned over £2m and made a margin. You often cannot say which of last year’s fourteen jobs carried the others.
What we do
CIS, end to end. Verification, deductions, monthly returns filed on time, subcontractor statements out, year end reconciled. You send us the payments, we handle HMRC.
Gross payment status. If you qualify, you get paid without 20% coming off the top. For a firm on £2m turnover that is a serious change to your working capital. We check whether you pass the turnover, compliance and business tests, and we make the application.
VAT and the reverse charge. Set up properly in your accounting software so it applies itself, rather than being a decision on every invoice.
Job-level costing. Labour, materials, plant and subcontractors against each job, so you can see margin per job rather than margin per year. This is usually the thing that changes how people price.
Cash flow forecasting that accounts for retentions, stage payments and the gap between doing the work and being paid for it.
Plus the ordinary compliance. Year end accounts, corporation tax, VAT returns, payroll, self assessment.
Who we work with
UK construction limited companies turning over between £500,000 and £5 million. Main contractors and subcontractors both.
We work with clients across the whole country. Everything runs on cloud accounting, so where you are makes no difference.
If you are a sole trader or turning over under £500k, we are probably not the right fit, and we will tell you so rather than take the fee.
Why a specialist
You should not have to explain what a retention is, or why your March invoice has no VAT on it, or what a JCT contract does to your revenue recognition.
A generalist accountant learns construction on your time. We already know it, which means fewer questions coming back to you and advice that reflects how you actually get paid.
Common questions
Do I need to register for CIS as a builder?
If you pay subcontractors for construction work, yes, as a contractor. If you are paid by another contractor, yes, as a subcontractor. Most builders are both.
What rate will be deducted from my invoices?
20% if you are registered and verified. 30% if you are not registered. 0% if you hold gross payment status.
Can I get gross payment status?
If your turnover excluding materials is over £30,000 (or £100,000 for a company with multiple directors), your tax affairs are up to date, and you run the business through a bank account. We check and apply on your behalf.
Does the VAT reverse charge apply to my work?
If you are invoicing a VAT-registered business that is itself CIS-registered and is not the end user of the building work, yes. If you are invoicing a homeowner, no.
What if my CIS returns are already late?
We file them and deal with HMRC. Late returns are common and fixable. Penalties can often be reduced.
Book a call and we will look at your CIS position, your VAT treatment and your last set of accounts, and tell you what we would do differently.
Common questions
Does CIS apply to builders?
You take work from a main contractor or a developer, and you pay your own gangs, groundworkers and specialist trades to deliver it. That means CIS applies to you twice over, in both directions, and most of the trouble we see starts there. If you have not verified a subcontractor with HMRC, you deduct at 30%, not 20%. Get it wrong and the shortfall is yours, not theirs.
Does the VAT domestic reverse charge apply to builders?
Usually yes. The domestic reverse charge follows CIS scope. Where you supply builders work that falls inside CIS to a customer who is VAT registered, registered under CIS and is not an end user, you do not charge VAT on the invoice. Your customer accounts for it instead. Supplies to homeowners and to end users stay outside it, and you charge VAT the normal way.
Who we work with
- Sector: construction only. Contractors, subcontractors and the trades that work on site.
- Turnover: roughly £500,000 to £5 million a year.
- Structure: mostly limited companies, plus established sole traders and partnerships.
- Where: our office is in Cannock, Staffordshire. We work with clients across the UK on cloud accounting.
Who we are not for: businesses outside construction, property developers, brand new start-ups with no trading history, and anyone who wants filing done and nothing else.
If you are not sure, here is the longer version. We will tell you on the first call if we are not the right fit.