Accountants for Insulation and Cladding Contractors

Insulating or cladding a building is work on the fabric of that building, so it sits inside the Construction Industry Scheme.

There is no argument to be had about that. The question that actually costs firms in this trade money is a different one. Who is paying for the job, and what has to happen before they do.

Scheme funded work does not behave like a normal job

A large share of domestic insulation work is never paid for by the person living in the house. It is funded through government or energy company schemes, and the money reaches you from a scheme administrator or a lead installer after the work has been measured and signed off.

Four things change as soon as that is how you are paid.

When you can recognise the revenue. Finishing the work is not the same as having earned the right to be paid for it. Where the funding only firms up once the job has passed inspection and the paperwork has cleared, you are carrying completed work that is not yet certain income. Book it all as revenue on the day the van leaves site and your management accounts stop being true the first time a measure gets rejected.

When the cash actually lands. Scheme payment runs follow their own calendar. Your materials and your wages follow the week. A firm doing good work at a decent margin can still run out of money in the gap between the two, and that gap is longer on funded work than on anything you invoice direct.

What happens if funding is withdrawn after the fact. Retrospective clawback is a live risk on this kind of work, and it does not land in the same period the job did. That belongs in your accounts as a known exposure rather than as a surprise.

How the VAT works. The party you invoice is often not the householder, and who your customer is for VAT purposes drives the whole treatment, including whether the domestic reverse charge applies. Invoice the wrong party and you have a VAT correction as well as a payment problem.

Cladding remediation is a different contract to a domestic install

External wall insulation and cladding replacement on existing buildings has grown into a trade of its own, and it looks nothing like a street of loft installs.

The contracts are longer, the client is usually a housing provider or a managing agent rather than a homeowner, and the money is held back in ways a domestic installer never has to think about.

• Retention. A meaningful slice of the contract value is held until practical completion and then held again until the end of the defects period. That money is yours, and it is very easy to stop chasing.
• Long defect liability. The tail on remediation work runs for years. Your accounts need a provision for it and your insurance needs to still be in force when a claim arrives, which is a harder ask than it sounds on this kind of work.
• Measured work. You are paid on valuation against what a surveyor agrees you have done, not on what you invoice. If your internal cost tracking does not run alongside the valuations, you will not know a job is losing money until the final account.
• Scaffolding. On a remediation block the scaffold can stand for a year. Standing hire keeps running whether or not your programme does, so every week of delay costs you money that was priced into nobody’s tender.

Get the job by job reporting right on these contracts and the pattern shows up early. Leave it to the year end accounts and you find out about a bad job long after the last chance to do anything about it.

What we do

CIS run properly, with verification and monthly returns handled, and deductions reclaimed where they have been applied to work that should not have carried them.

Revenue recognised on funded work in a way that reflects when you have actually earned it, so the profit figure you are managing from is the real one.

Cash flow forecasting built around scheme payment runs, retention release dates, standing scaffold and the weekly wage bill rather than around invoice dates.

Contract level reporting on remediation work, tracking cost against valuation while the job is live.

Retention tracked as an asset, with the release dates on a schedule somebody looks at.

Plus the ordinary work underneath all of it. And the standard work underneath it. Accounts, corporation tax, VAT, payroll and self assessment.

Who we work with

UK insulation and cladding limited companies turning over between £500,000 and £5 million. Everything runs on cloud accounting, so it makes no difference to us where your office is.

Common questions

Is insulation work inside CIS?
Yes. Installing insulation into or onto a building is work on the fabric of the building, which puts it within the scheme.

We are paid by a scheme administrator, not the customer. Does CIS still apply?
It depends on the contract chain and on whether the party paying you is acting as a contractor. Send us one of the contracts and we will tell you.

When should scheme funded work go into our turnover?
When you have done what is required to be entitled to the money, which on funded work is usually later than the day the job finished.

Does the VAT reverse charge apply to cladding remediation?
On work inside CIS invoiced to a contractor who is not the end user, yes. A housing provider engaging you directly may well be an end user, which changes the answer, so it is worth checking per client.

How should retention appear in our accounts?
As a debtor, with the expected release date recorded against it. Writing it off mentally because it feels gone is how firms lose it.

Book a call and bring one funded job and one remediation contract. We will tell you whether the revenue is going in at the right point and what the retention on your balance sheet is really worth.

Book a call