Accountants for Dryliners

Drylining is inside the Construction Industry Scheme, and most drylining firms are inside it twice.

Metal stud, boarding, taping and jointing, partitions and suspended ceilings are all construction operations, with no exclusion to argue for.

The part that costs money is the second position. Drylining is one of the most heavily subcontracted trades on any site. Packages come down to you from a main contractor and go straight back out to gangs, which makes you a subcontractor on the money coming in and a contractor on the money going out. Verification, deduction, statements and a monthly return are due on everyone you pay.

Firms get the subcontractor side right because a main contractor forces them to. The contractor side is the one that slips, and it is the one HMRC charges penalties on.

CIS and employment status are two separate questions

This is the point that catches drylining companies hardest.

Verifying a gang, deducting 20% and filing the return deals with the tax you withhold. It settles nothing about whether those men are self employed. HMRC can accept that your CIS paperwork is faultless and still argue that the people on it are employees.

The test is how the relationship works week to week. A fixer who has worked only for you for two years, on your rates, in your van, doing whatever your supervisor puts him on each morning, is a hard person to describe as running his own business. A gang priced for a floor of boarding, moving between contractors and carrying its own risk on the price, looks very different.

If that argument is lost, the bill is PAYE and employer’s National Insurance backdated across the period, with penalties on top. CIS already deducted can be set against it, which reduces the number without removing the problem.

Labour-only gangs are normal in this trade and are not a problem in themselves. Never having looked at the position is.

Measured work, and what a remeasure does to your revenue

Drylining is priced by the metre, and the final account is settled on what is actually on the wall rather than what was on the drawing.

So the value of a job keeps moving after the work is finished. A remeasure goes up when the design changed and down when a quantity surveyor disagrees with how you have taken off a reveal or a return.

That leaves a question for your accounts. Recognising the full application value on every live contract flatters your profit and brings forward a tax bill on money that may never arrive. Recognising only what has been certified can understate a strong year and make your figures useless for pricing the next job.

The number that keeps this under control is the gap between applied and certified, contract by contract, looked at every month. Firms that track it are rarely surprised at year end. Firms that do not find out in month nine that a profitable-looking contract was carrying £80,000 of disputed measure.

Applications for payment are a different thing from invoices

Most of your income arrives through a monthly application, a payment notice back from the contractor, and a payment that may be lower than either.

An application is a claim for a valuation. It is not a VAT invoice, and raising one does not by itself put the VAT on your return. Get the sequence wrong and you either pay VAT over on money nobody has certified, or you are late declaring VAT you should have.

Applications also have to go in on the contractor’s date and in the contractor’s format. Late applications are the most common way a drylining firm loses money it has genuinely earned.

Retention

Retention is held back on every valuation and released in two stages, at practical completion and again at the end of the defects period. On a drylining company turning over a few million, the balance sitting in retention across live and finished contracts is often bigger than the year’s profit.

Track it per contract with a release date against it, because nobody in a main contractor’s office is going to ring you about it. The second release is the one both sides forget.

What we do

CIS run monthly in both directions, including verification, deductions, returns and the statements your gangs need.

Employment status reviewed across your labour before HMRC does it for you, with the working practices written down rather than assumed.

Revenue recognised on what you expect to be certified, with applied against certified and margin reported by contract each month.

Cash flow planning built around applications, certification dates, retention and slow payers, which is where drylining firms run out of money.

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

Who we work with

UK drylining and interior fit-out limited companies turning over between £500,000 and £5 million, anywhere in the UK.

Common questions

Do dryliners need to register for CIS?
Yes. Drylining is a construction operation, so you register as a subcontractor. If you pay your own gangs you also need to be registered as a contractor and file monthly returns.

My gang has always been self employed. Is that enough?
No. Length of arrangement is not what decides it, and CIS registration does not decide it either. It turns on how the work is controlled and priced in practice.

Should CIS be deducted from my materials?
No. The deduction is calculated on the labour element. Show materials separately on your application so the contractor can exclude them.

How do I stop 20% coming off my applications?
Apply for gross payment status. The compliance test is the hurdle, and a firm running its own subcontractors has a lot of filing to keep clean first.

When should I recognise revenue on a contract that has not been remeasured?
On what you reasonably expect to be certified, not on the gross application. Any amount in genuine dispute should be visible separately rather than buried in turnover.

Book a call. We will look at your live contracts, tell you what is sitting in applied-but-not-certified and retention, and where your CIS contractor filing is exposed.

Book a call