Erecting scaffold is a construction operation. Hiring the kit out without a man is not.
Finance Act 2004 s.74(2)(f) names erection of scaffolding among the operations that fall inside the Construction Industry Scheme. HMRC’s manual at CISR14260 draws the other half of the line, treating hire of plant with an operator as within the scheme and hire without an operator as outside it.
So the split is clean. Your squad puts the scaffold up and strikes it, that labour is inside CIS. The customer collects tube and boards and erects it himself, that is outside.
Firms that do both need the invoice to show both
Most scaffolding companies of any size run erection contracts and a hire desk at the same time, and the two are taxed differently.
If one invoice says “scaffolding, £8,400”, the contractor paying it will apply CIS to the lot. You will then spend a year getting the hire element back. Split the invoice at the point it is raised.
- Erection and dismantling labour, inside the scheme
- Weekly hire of the erected scaffold, see the review note below
- Dry hire of equipment with no labour, outside the scheme
- Transport and delivery of materials with no work carried out, outside the scheme
Your balance sheet is the business
Scaffolding is capital intensive in a way that most trades are not. Tube, fittings, boards, beams and ladders are plant, and they qualify for capital allowances. What they are not is a consumable, and writing large kit purchases straight to the profit and loss account as materials is one of the more common errors we correct.
Getting it right matters twice over. It changes the tax you pay in the year of purchase, and it changes the balance sheet a lender or a bonding provider looks at when you need finance for the next yard of kit.
How you fund it also changes the answer. Outright purchase, hire purchase and lease each carry a different tax treatment, and the difference on a £150,000 kit order is not small.
Kit that walks off site
Every scaffolding firm loses kit. It goes home in the back of somebody’s van, it goes on the wrong wagon, it stays on a site nobody goes back to.
If your stock records only exist in the yard foreman’s head, you cannot tell the difference between kit that has been lost and kit that is out on hire, and both look identical in the accounts. Two things fix it. Count the yard properly at year end, and reconcile it against what the hire desk says is out.
Losses are a deductible cost. They are also a number you should be able to see, because a firm losing five per cent of its stock a year is funding somebody else’s business.
Standing time is you lending money
Hire revenue and contract revenue behave nothing alike. Erection is billed on completion. Hire runs weekly, in arrears, for as long as the scaffold stands.
When a job overruns by three months, two things happen at once. You are financing a customer who has not asked for a loan and is in no hurry to repay it. And that kit cannot go out on another contract while it stands, so the overrun costs you the hire income you did not earn elsewhere as well as the debtor days.
Long standing jobs need watching weekly against the contract, not at the point somebody finally asks for the scaffold back.
What we do
Split CIS correctly across erection and hire, and set the invoicing up so it happens by default.
Capital allowances on kit, claimed properly against how it was funded, with the balance sheet built to be shown to a lender.
Stock reconciliation between the yard, the hire desk and the accounts.
Contract and hire revenue reported separately, with standing time and debtor days visible per contract.
Cash flow forecasting that accounts for the money tied up in kit and in scaffold still standing.
Plus the ordinary compliance. Year end accounts, corporation tax, VAT returns, payroll and self assessment.
Who we work with
UK scaffolding limited companies turning over between £500,000 and £5 million. Everything runs on cloud accounting, so where your yard is makes no difference to us.
Common questions
Is scaffolding inside CIS?
Erection is, by name in the legislation. Dry hire of equipment without an operator is outside the scheme. Most firms are doing both.
A contractor is deducting CIS from our hire charges. Is that right?
It depends on whether the hire sits under the same contract as the erection. Send us the contract and the invoice and we will tell you.
Do we need to register as contractors as well?
If you pay subcontract squads for erection work, yes, with verification and monthly returns.
Should new tube and fittings go through the profit and loss account?
No. It is plant, so it belongs on the balance sheet with capital allowances claimed against it.
Does the VAT reverse charge apply to us?
On work inside CIS invoiced to a contractor who is not the end user, yes. Domestic customers are end users, so you charge VAT as normal.
Book a call and send us one erection contract and one hire invoice. We will tell you whether the CIS split on them is right and what the kit on your balance sheet should look like.
Common questions
Does CIS apply to scaffolding companies?
Erecting scaffold is a construction operation. Hiring the kit out without a man is not. Finance Act 2004 s.74(2)(f) names erection of scaffolding among the operations that fall inside the Construction Industry Scheme. HMRC’s manual at CISR14260 draws the other half of the line, treating hire of plant with an operator as within the scheme and hire without an operator as outside it.
Does the VAT domestic reverse charge apply to scaffolding companies?
It follows the CIS answer above. Where the work falls inside CIS and your customer is VAT registered, registered under CIS and is not an end user, the reverse charge applies and you do not charge VAT. Where the work falls outside CIS, or the customer is an end user or a homeowner, you charge VAT as normal. Two jobs in the same week can be treated differently.