Accountants for Skip Hire Companies

Skip hire is outside the Construction Industry Scheme.

HMRC names skips directly. Its manual on plant and equipment hire treats hire without an operator as falling outside the scheme, and uses skips as the example of exactly that. Delivering materials to a site is excluded as well.

So if a main contractor is taking 20% off your invoices for dropping a skip on their site and collecting it a week later, they have it wrong. It happens often, usually because their office applies CIS to every supplier who turns up in a lorry.

Where the line actually sits

The test is whether an operator goes with the equipment.

Outside the scheme: a skip delivered, left, and collected. The customer fills it. Nobody from your firm does any work on site. That is equipment hire and it is excluded by name.

Worth checking: grab lorry and tipper work where your driver is doing more than dropping and collecting. Hire of plant with an operator can fall inside the scheme where the work being carried out is itself a construction operation. A grab loading spoil as part of a groundworks job is a different question to a skip sitting on a driveway.

If you have a contractor deducting from you, the fix is a conversation and a reclaim, in that order. Deductions already taken come back through your corporation tax return, or through an in-year repayment claim where the sum is big enough to bother with.

VAT follows the same logic. The domestic reverse charge only applies to construction services within CIS, so you charge VAT normally on skip hire. Firms that have applied the reverse charge across the board have created a problem in the other direction.

The numbers that decide whether this business makes money

Skip hire is a capital heavy trade with a cost line most trades never see, and both get handled badly.

Capital allowances. Skips, hook loaders, grab lorries, roll-on-roll-off units, compactors and weighbridges are all plant. Commercial vehicles are treated as plant and get the full relief. Cars do not, and pickups have changed treatment recently, so the fleet needs looking at asset by asset rather than as one line in the accounts.

Landfill tax and gate fees. For most operators this is the single largest variable cost, and it moves with the weight and the type of what you tip. Rates change annually and the tax is devolved, so Scotland and Wales run their own versions. If your pricing is set per skip and your cost is set per tonne, your margin is decided by what customers put in the skip rather than by your price list.

Hire income and disposal income are two different things. Most skip firms bill one number and see one number. Split them. The hire of the container has one cost profile, the haulage another, and the disposal another again. Until they are separate lines you cannot tell whether a price rise belongs on the hire or on the tipping.

Recycling and material recovery. Wood, metal, hardcore, plasterboard and green waste all have their own onward value or cost. Operators running a transfer station often treat recovered material as a happy accident rather than a revenue stream, and never find out which grades are carrying the site and which are being processed at a loss.

Waste carrier registration and permits. Registration with the environmental regulator, plus permits or exemptions for any transfer site. These are running costs with renewal dates, and so is the operator licence for the fleet. All of it belongs in the cash flow forecast.

What we do

Confirm which of your work, if any, sits inside CIS, and stop deductions being taken from work that does not.

Reclaim what has already been deducted in error.

Get the capital allowances position right across skips, plant and vehicles, including which assets qualify for the fastest relief.

Break the revenue into hire, haulage, disposal and recovered material, so you can see where the margin is coming from and where landfill tax is eating it.

Cash flow planning that accounts for tipping costs going up every April and fleet replacement arriving in lumps.

Underneath it all, the usual. And the standard work underneath it. Accounts, corporation tax, VAT, payroll and self assessment.

Who we work with

UK skip hire, waste management and haulage limited companies turning over between £500,000 and £5 million. We work across the whole UK.

Common questions

Does CIS apply to skip hire?
No. Hiring out equipment without an operator is outside the scheme, and HMRC’s guidance names skips as an example. Delivery of materials is excluded as well.

A contractor has deducted CIS from my skip invoices. What now?
Tell them, and reclaim it. The work was never within the scheme, so the deduction should not have been made, and you get it back through your corporation tax return.

Do I charge VAT to a main contractor?
Yes. The reverse charge follows CIS scope, and skip hire sits outside it.

What about grab lorry work with our own driver?
That needs looking at properly. Hire with an operator is treated differently to dry hire, and the answer turns on what the machine is being used for.

Can I claim the full cost of a new hook loader in one go?
Usually a large part of it, and often all of it. The treatment depends on how the asset is used in the business, so it is worth checking before you sign the order.

Book a call. Bring last month’s tipping invoices and one contractor’s remittance, and we will tell you whether you are being deducted from wrongly and what your real cost per tonne is.

Book a call