Accountants for Plasterers

Plastering is inside the Construction Industry Scheme.

It is a finishing and alteration operation carried out on a building, which puts it squarely within the list of construction operations in the Finance Act 2004. There is no exclusion to argue for and no test to apply.

What makes plastering different from most trades is that you are usually caught at both ends of the scheme on the same job.

You invoice a main contractor, and they take 20% off you as a subcontractor. You then pay your own gang, and you have to verify them, deduct from them and file a return for them as a contractor. Money going out with tax withheld, money coming in with tax already withheld.

That double position is why plastering companies feel the cash squeeze harder than almost anyone else on site.

Gross payment status is the biggest lever you have

If you take one thing from this page, take this. Getting onto gross payment status stops the 20% coming off your sales invoices at source.

On a plastering business turning over £1.5 million, that is a very large sum staying in your account through the year instead of sitting with HMRC until your corporation tax return catches up with it. Nothing else available to you moves cash by that much for that little effort.

The catch is the compliance test. HMRC looks at whether your returns and payments have been made on time, and a plastering firm running its own subcontractors has a lot of filing obligations to keep clean. Late monthly returns are the usual reason a firm either fails the application or loses the status once it has it.

That is fixable, but it takes a year of clean filing, which is why it is worth starting now rather than the month you decide you want it.

Price work versus day rate, and what it hides

Most plastering is priced by the metre. That works until it does not.

A day rate job tells you what it cost. Price work tells you what you were paid and leaves you to work out the rest. If a ceiling takes three days instead of one because the substrate was wrong, the loss disappears into the month unless somebody is recording it against the job.

Firms in this trade often carry a contract that loses money quietly for six months while the overall figures look fine, because the good jobs cover it. By the time it shows up in the year end accounts, the same customer has already priced you for the next one on the same rates.

Job level costing is what stops this. Labour, materials, plant hire and any subcontract cost recorded against the job rather than the month, so you can see which contracts and which customers actually pay.

Materials should be outside the deduction

CIS applies to the labour element of an invoice. The materials you have paid for are excluded from the amount the deduction is calculated on.

Plastering is a material-heavy trade. Board, bonding, multi-finish, beads, scrim and adhesive add up fast, and on a boarding and skimming package the materials can be a serious share of the invoice value.

If your invoice shows a single figure with no breakdown, the contractor will usually apply 20% across all of it. You will get the difference back eventually, through your corporation tax return or a repayment claim, but you have funded that contractor’s convenience in the meantime.

Split labour from materials on every invoice you issue, and check that the deduction statements coming back to you were calculated on the labour figure.

Your gang, and whether they are really self employed

The other side of the same coin. When you pay labour-only subcontractors, CIS registration handles the tax deduction, but it does not settle whether those men are self employed at all.

Somebody who works only for you, week in week out, using your stilts and your mixer, turning up where and when you tell him, starts to look like an employee to HMRC regardless of what the CIS paperwork says. If that argument is lost, you are looking at PAYE and National Insurance backdated, with penalties on top.

Labour-only gangs are normal in plastering and are not automatically a problem. Not checking the position at all is.

What we do

CIS run monthly in both directions. Verification, deductions, returns and the statements your subcontractors need.

Gross payment status reviewed and applied for, and the filing discipline behind it kept tight so you keep it.

Invoicing set up so labour and materials are separated and the 20% lands on the right number.

Job costing across price work, so you can see margin by contract instead of finding out at year end.

Cash flow planning built around retentions and slow payers, which is where plastering firms actually run out of money.

Underneath it all, the usual. Plus year end accounts, corporation tax, VAT returns, payroll and self assessment.

Who we work with

UK plastering and drylining limited companies turning over between £500,000 and £5 million, anywhere in the UK.

Common questions

Do plasterers need to register for CIS?
Yes. Plastering is a construction operation. If you also pay your own gang, you need to be registered as a contractor as well as a subcontractor.

Should CIS be deducted from my materials?
No. The deduction applies to labour. Show materials separately so the contractor can exclude them.

How do I stop having 20% taken off my invoices?
Apply for gross payment status. The compliance test is the hurdle for most plastering firms, so get your filing record clean first.

Do I have to verify men I have used for years?
Yes, if they have not been included on a return in the current or previous two tax years. Verification is what sets the rate you deduct at.

Are labour-only subcontractors self employed?
Not automatically. It depends on how the working relationship operates in practice, and CIS registration does not decide it.

Book a call. We will look at your last twelve months, tell you whether you would pass the gross payment tests today, and what stopping the 20% is worth to you in cash.

Book a call