Accountants for Bricklayers

If you pay a gang, you are a contractor under the Construction Industry Scheme, whether you think of yourself as one or not.

Bricklaying is a construction operation, so the deduction coming off your own invoices is no surprise to anybody. The part that catches firms out is the other end. The moment you pay another business or another self-employed brickie for construction work, HMRC treats you as a contractor, with everything that carries. Registration, verification before the first payment, deductions at the right rate, a monthly return by the 19th and a statement to every man you paid.

Nobody sets out to become a contractor. You take on more work than your own lads can lay, you bring in a gang for eight weeks, and you are one.

Get the verification done before the first payment

Verify a subcontractor with HMRC and you deduct at 20%. Pay him before you have verified him and the rate is 30%.

If you deducted 20% when you should have deducted 30%, HMRC comes to you for the difference, not to him. On a gang costing £6,000 a week that gap builds fast, and it is money you have already paid out and will not get back from a man who has moved to another site.

CIS status and employment status are two different questions

This is the one to be careful about.

Deducting CIS from somebody does not make him self-employed. The scheme is a tax collection mechanism, and it says nothing about whether the man is genuinely in business on his own account or is working for you as an employee.

HMRC can look at a gang member who has worked for you and nobody else for two years, turns up when you tell him, uses your kit, is directed by your foreman and carries no financial risk on the work, and argue he was an employee all along. If that argument lands, you are looking at PAYE and employer’s National Insurance on what you paid him, with interest and penalties on top. The CIS you deducted gets set against it, but it does not come close to covering it.

The point is that a CIS deduction is not a defence. It is worth knowing where each of your gangs sits before somebody at HMRC decides for you.

Price work and day rate do different things to your margin

On price work, per thousand or per square metre, your labour cost per unit is fixed before the first brick goes down. Weather and a badly stocked site both land on the gang. Your margin only moves if you have to go back and rectify.

On day rate you carry all of it. A wet fortnight or a scaffold that nobody has adapted comes straight off your profit, and it comes off quietly, because the wages went out as normal and nobody flagged it.

Plenty of firms run both and could not tell you which made more money last year. That is a costing question, and it is usually the first thing we fix, because it changes how the next job gets priced.

Materials, and the labour-only invoice

A CIS deduction applies to the labour element of a payment. The direct cost of materials the subcontractor paid for comes out first.

Most bricklaying gangs are labour only, which means there are no materials to come out and the deduction applies to the full value of what you pay them. If you are the one being paid and you are supplying sand, cement, ties and lintels, show that cost separately on your invoice so it is not swept into the deduction.

Gross payment status removes the problem on your own income entirely. If your turnover excluding materials clears the test and your compliance record is clean, it is worth applying, because on a labour-heavy business the amount sitting with HMRC is large.

What we do

CIS as a contractor and a subcontractor. Verification, deductions, monthly returns, statements out, and the deductions taken from you recovered rather than left sitting there.

A view on employment status for each gang, before it becomes a question you are answering under pressure.

Gross payment status tested and applied for.

Job costing that shows price work and day rate separately, with actual labour cost per thousand against what you tendered.

Cash flow forecasting built around valuation dates, retentions and payment terms that were never yours to set.

Plus the ordinary compliance. Underneath it all, the usual. Year end accounts, corporation tax, VAT, payroll and self assessment.

Who we work with

UK bricklaying and masonry limited companies turning over between £500,000 and £5 million, anywhere in the country.

Common questions

Am I a contractor if I only use a gang occasionally?
Yes. There is no minimum. Paying anybody for construction work brings you in as a contractor from that first payment.

What rate do I deduct from a gang?
20% if the man is registered and verified. 30% if he is not registered. 0% if he holds gross payment status.

Does deducting CIS mean my gang are self-employed?
No. They are separate questions, and HMRC can still argue employment. This is worth looking at properly rather than assuming.

Do I deduct CIS from the whole invoice?
From the labour element. If the subcontractor paid for materials, that direct cost comes out before the deduction is worked out.

We have never filed a CIS return and we have been paying a gang for a year. What now?
We file what is outstanding and deal with HMRC. Late returns are common and fixable, and penalties can often be reduced.

Book a call and bring the last three payments you made to a gang. We will tell you whether the CIS on them is right and whether the employment status stands up.

Book a call