Accountants for Driveway Contractors

If your customers are homeowners, you charge VAT the normal way. The reverse charge does not apply to that work.

A homeowner is an end user. They are not VAT registered, they are not registered under CIS, and the domestic reverse charge only operates between businesses in the scheme. So the invoice goes out with VAT on it, the same as it did before 2021.

We still see driveway firms that switched everything to the reverse charge when the rules came in and never went back. That means years of invoices raised without VAT on work where VAT was due. HMRC will want the output tax, and the householder who paid you in 2023 is not going to send you 20% now.

Where the reverse charge does apply to you

Not every job is a private drive.

If you are laying block paving or tarmac for a housebuilder on a development, or subcontracting to a main contractor on a commercial car park, and they are VAT registered, CIS registered and not the end user, that invoice falls under the reverse charge and you do not charge VAT on it.

So the rule is set by who you are invoicing, not by what you are laying. That decision belongs on the customer record in your accounting software, set once per customer, rather than being made from memory every time somebody raises an invoice.

CIS applies to you even though your customers do not operate it

Driveways, roadways and access works are named construction operations. That does not put your householder customers into the scheme, because private individuals having work done on their own home are not contractors.

It does put you in it. If you pay groundworkers, kerb layers, tarmac gangs or a digger driver for construction work, you are a contractor under CIS and the duties are yours. Verify each subcontractor before the first payment, deduct at the right rate, file the return by the 19th, and issue statements.

Deductions come off labour, not off materials, but only where the materials are genuinely evidenced. On this trade materials are a large share of the invoice, so getting that split documented is worth real money to the subcontractor and protects you if HMRC looks at it.

Materials go out before the money comes in

You pay for tarmac, blocks, sub-base, kerbs and the skips before the customer settles up. On a busy month that is a lot of cash out of the door on work that has not been paid for yet.

Deposits and staged payments help, and most firms in this trade take one. Two things follow from that. A deposit creates a VAT point when you receive it, so the VAT is due in that quarter even if the job runs into the next one. And a deposit is working capital for a job you have not done, so spending it as though it were profit is how a busy summer turns into a difficult January.

Seasonality is a planning problem, not a weather problem

The year is won between March and October. Winter is wet, jobs slip, and the fixed costs carry on.

That is manageable if the forecast is built for it, with tax and VAT set aside in the good months rather than found in the bad ones. Most of the cash flow work we do for driveway firms is about making the winter dull.

Knowing your real cost per square metre

Firms quote by the square metre off a material price and a rough labour figure. The jobs that lose money are the ones where everything else was invisible.

Muck away and tipping charges. Wastage on cuts and awkward shapes. Plant hire, which sits inside CIS when it comes with an operator and outside it when it does not. Depth of dig and ground conditions. Access, which decides whether a wagon can get near the job or whether it is barrowed forty metres.

When we cost jobs properly for a driveway firm, the surprise is rarely the average. It is the spread between the best and worst jobs, and the fact that the worst ones usually shared a feature nobody was pricing for.

What we do

CIS as a contractor. Verification, deductions, monthly returns, statements and year end reconciliation.

VAT set correctly per customer type, with domestic work standard rated and contractor work reverse charged, handled in the software.

Job costing by square metre including waste, disposal, plant and access.

Cash flow and seasonal planning, with deposits treated as the liability they are.

Capital allowances on vans, dumpers, rollers and plant.

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

Who we work with

UK driveway, surfacing and paving limited companies turning over between £500,000 and £5 million. We work with firms anywhere in the UK on cloud accounting.

Common questions

Do I charge VAT on a domestic driveway?
Yes. The homeowner is an end user, so you charge VAT in the normal way.

We have been reverse charging everything since 2021. What now?
Get it corrected. The VAT you should have charged is still your liability, so the sooner it is put right, the smaller the problem.

Are driveways within CIS?
Yes. Roadways and access works are construction operations under the scheme.

My customers are all private. Do I still need to register for CIS?
If you pay subcontractors for the work, yes, as a contractor. Your customers being householders does not change that.

Is hired plant within CIS?
With an operator, yes. Dry hire without an operator, no.

Book a call. Send us three invoices and a recent supplier statement and we will tell you whether your VAT treatment is right and what your driveways actually cost you per square metre.

Book a call