Accountants for Demolition Contractors

Demolition and dismantling are named in the legislation, so your contract income is inside the Construction Industry Scheme.

That part is settled. The part that gets handled badly is the money coming in from the other direction.

Almost every demolition firm has a second revenue stream. Steel, copper, cable, lead, brick, slate, reclaimed timber, machinery, and crushed material sold as recycled aggregate. On some jobs it runs to tens of thousands. In the accounts it very often does not exist as income at all.

Scrap and reclaim is sales income

The common treatment is to net it off. The weighbridge tickets come back, the money lands, and it gets posted against the cost of the job so the job looks cheaper. Sometimes it never touches the accounting system at all, because the yard paid cash and nobody raised a sales invoice.

Both cause the same set of problems.

Your turnover is understated, which matters when a bank or a bonding provider is looking at the accounts. Your job margins are unreadable, because the scrap has flattened a cost line rather than shown up as revenue. And unrecorded cash receipts against a business with a known second income stream is precisely the shape HMRC looks for.

Scrap and reclaim is trading income. It belongs in turnover, invoiced or self-billed, matched to the job it came off.

Price the reclaim into the job

If you have looked at a frame and worked out there are 40 tonnes of steel in it, that is a number in your tender. Firms that price reclaim in win work that firms pricing labour and plant alone cannot get near.

The problem is checking the assumption afterwards. If scrap income is netted off against costs, you can never go back and ask whether the 40 tonnes was really 40 tonnes, or whether the price you assumed held by the time the wagons went out. Record it by job and that question becomes answerable, and the next tender gets better.

Metal prices move. A tender priced on a reclaim value from six months ago is carrying a risk that nobody has written down anywhere.

Asbestos, licensed work and the costs that get missed

Licensed asbestos work carries costs that never appear on a labour and plant estimate. Notification periods, air monitoring and clearance, decontamination units, consignment paperwork, hazardous waste disposal at a different rate to ordinary waste, and insurance that reflects what you do.

If those costs are sitting in overheads rather than against the job that caused them, your licensed work looks more profitable than it is and your ordinary demolition looks worse. We see that specific distortion often.

Plant, and what it should be doing to your tax bill

High reach machines, excavators, crushers, screeners, attachments and grabs are plant. They go on the balance sheet and attract capital allowances, including the annual investment allowance where it is available to you.

How you funded the machine changes the tax treatment. Outright purchase, hire purchase and leasing are all handled differently, and on a £400,000 high reach the difference is not a rounding error. Getting a machine into the accounts the wrong way costs tax in the year you bought it and misrepresents the balance sheet to anybody lending against it.

Waste, tipping and landfill

Muck away and disposal is one of the largest variable costs on a demolition job and one of the least well estimated. The tonnage that leaves site is rarely the tonnage in the estimate, and landfill tax on the difference is real money.

Crushing on site changes the arithmetic in two directions at once. It cuts what you pay to get material off site and creates something you can sell. Worth costing properly rather than treating as a bonus.

What we do

CIS as contractor and subcontractor. Verification, deductions, monthly returns, statements, and the deductions taken from your own income recovered.

Scrap and reclaim income recorded properly, by job, so it shows in turnover and you can see what each job really made.

Job costing across labour, plant, tipping, licensed work and reclaim income, with margin visible per contract.

Capital allowances on plant, claimed against how the machine was funded.

Cash flow forecasting around applications and the delay between demolition finishing and the last payment landing.

Plus the ordinary compliance. The compliance side runs alongside. Accounts, corporation tax, VAT returns, payroll and self assessment.

Who we work with

UK demolition and dismantling limited companies turning over between £500,000 and £5 million. Everything runs on cloud accounting, so location makes no difference.

Common questions

Is demolition inside CIS?
Yes. Demolition and dismantling are named construction operations. If you pay subcontractors as well as being paid by main contractors, you are registered in both directions.

How should scrap income be treated in the accounts?
As sales. It goes in turnover, matched to the job it came from, rather than netted against the cost of that job.

Does the VAT reverse charge apply to demolition work?
On work inside CIS invoiced to a contractor who is not the end user, yes. A domestic customer is an end user, so you charge VAT as normal.

Can I claim capital allowances on a high reach machine?
Yes. It is plant. The claim available depends on how you funded it, which is worth checking before you sign the finance agreement rather than after.

Should reclaim value go into the price?
Yes, and it should be recorded separately afterwards so you can see whether the assumption you priced on was right.

Book a call and bring one completed job with the scrap tickets. We will show you what that job actually made once the reclaim income is put back where it belongs.

Book a call