CIS returns, subcontractor payroll and construction VAT
Most construction businesses do not lose money on the build. They lose it on the paperwork around it. CIS deductions get taken at the wrong rate because a subcontractor was never verified. Monthly returns go in late and the penalties stack up.
The domestic reverse charge gets applied to the wrong invoices and cash flow takes the hit. We handle subcontractor verification and monthly CIS returns. That includes payroll for mixed teams of employees and subcontractors, gross payment status applications and VAT under the reverse charge rules. If HMRC have already raised a query we will deal with them directly on your behalf.
Project costing and job level reporting
Most construction businesses know whether the year was profitable. Far fewer know which jobs made the money and which ones quietly lost it. Job level reporting fixes that.
We set your accounts up so costs sit against individual contracts rather than being pooled into one figure at year end. You can then see labour, materials, plant and subcontractor spend on every job. Variations and retentions get tracked properly instead of reconciled from memory. And you can compare what a project actually cost against what you quoted for it. Over time that changes how you price. You stop estimating from experience and start quoting from your own numbers.
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Who we work with
Builders and main contractors
- You carry the contractor side of CIS which means verifying every subcontractor, filing monthly returns and getting deductions right before HMRC picks them up.
Roofers, plasterers and specialist trades
- Working as a subcontractor you should not be losing 30% to unregistered deductions when gross payment status or proper registration would keep that cash in the business.
Property developers and investors
- How a development is structured affects SDLT, VAT recovery and the tax on the eventual sale, and those decisions are far cheaper to get right at the start than to unpick later.
Landlords and letting agents
- Mortgage interest relief restrictions have made the question of whether to hold property personally or through a company a live one for most landlords, and the right answer depends on your income and your plans for the portfolio.
Surveyors and construction consultants
- If you invoice through your own limited company then IR35 status, dividend planning and getting the balance right between salary and dividends will make a bigger difference to your take home than anything else we do.
Have used SFB for the past 7 years, always helpful, knowledgeable and efficient, can be trusted 🙂
Does your construction business need an audit?
Most construction businesses do not need a statutory audit. The thresholds rose for financial years starting on or after 6 April 2025 so some companies that needed one before will not need one now. You are exempt if your company meets at least two of these three conditions. Turnover of £15 million or less. A balance sheet total of £7.5 million or less. An average of 50 employees or fewer. Because it is a two of three test you can exceed one threshold and still be exempt. The position also has to hold for two consecutive years before anything changes. Plant heavy contractors and developers holding sites often cross the balance sheet line well before turnover becomes an issue. There are other triggers. A shareholder with 10% or more of the share capital can require an audit. Group membership and certain regulated activities remove the exemption entirely. If you are anywhere near these lines it is worth checking rather than assuming. We will tell you where you stand and our audit team handles it from there.
Year end accounts, management accounts and bookkeeping
Year end accounts tell you what happened. They arrive months after the fact and by then the decisions they should have informed have already been made. Management accounts close that gap. We produce them monthly or quarterly depending on how fast your business moves so you know where you stand while you can still do something about it. That matters more in construction than in most sectors. Cash flow swings with payment terms and retentions. Work in progress can make a profitable month look like a poor one. A busy pipeline and a healthy bank balance are not the same thing. On the bookkeeping side we can take the whole function off you or work alongside whoever handles it now. Either way the aim is the same. Clean records through the year so the year end is a formality rather than a scramble.
Xero and Sage for construction businesses
Construction throws things at accounting software that most packages are not set up for out of the box. CIS deductions need to flow through correctly. Jobs need to be set up so costs land against the right contract. The VAT reverse charge has to be applied to the right invoices and not the rest. Getting that configuration right at the start saves a lot of unpicking later. We work with clients on Xero and Sage and can set the system up properly for how your business actually runs. If you are still on spreadsheets we will move you across and handle the transition. If you are already on a platform and something is not working we will look at it rather than insist you start again. Making Tax Digital means most businesses will end up here anyway so it is worth doing once and doing it properly.
Directors' self assessment and personal tax
Most construction business owners have their company accounts handled properly and then treat their own tax return as an afterthought. The two are closely linked. How you pay yourself affects both. Getting the balance right between salary and dividends changes what leaves the business and what you keep. Pension contributions made through the company are usually more efficient than personal ones. If you hold property or plant personally and the business uses it there is a sensible way to structure that and a costly way. We handle directors’ self assessment as part of the wider picture rather than as a separate January job. That means the planning happens during the year when it can still change the outcome, not after the year has closed when all we can do is report it. If your spouse is a shareholder or on the payroll we will look at that too because the household position often matters more than the company one.
Capital allowances, SDLT and property tax relief
Capital allowances are the relief construction and property businesses most often leave on the table. If you own a commercial property there is usually qualifying plant embedded in it. Heating, lighting, air conditioning, security systems and fitted kitchens all count and none of it is obvious from the purchase price. It does not matter how long you have owned the building or whether you built it yourself. The claim is still there. On the buying side SDLT is rarely as simple as the headline rate. Mixed use property, multiple dwellings and non residential rates can all change the number significantly and the reliefs have to be claimed at the right point rather than argued for afterwards. We work alongside your solicitor so nothing gets missed in the transaction. The common thread is timing. Most of these reliefs are far easier to secure when the deal is being structured than to reclaim once it has completed.
Why construction businesses choose SFB
- We already act for construction and property businesses across the Midlands so this is not a sector page written to fill a gap.
- We manage construction clients day to day which means you deal with someone who knows what a retention is and does not need CIS explaining to them.
- SFB has been advising businesses for over 14 years from offices in Nuneaton and Leicester.
- We are ICAEW, ACCA and AAT accredited and we have a full audit team in house rather than a relationship with someone who does it for us. That matters if your business is growing towards the audit thresholds because nothing has to change hands when you get there. You get the same team through the compliance work, the planning and the audit.
Construction accounting questions
Your company is exempt from a statutory audit if it meets at least two of three conditions. Turnover of £15 million or less. A balance sheet total of £7.5 million or less. An average of 50 employees or fewer. Because it is a two of three test you can exceed one threshold and still be exempt, and the position has to hold for two consecutive financial years before anything changes. These thresholds apply to financial years starting on or after 6 April 2025. Construction businesses holding significant plant or land often cross the balance sheet line before turnover becomes an issue, so it is worth checking rather than assuming.
The Construction Industry Scheme requires contractors to deduct money from payments to subcontractors and pass it to HMRC as an advance payment towards that subcontractor's tax and National Insurance. Contractors must register. Subcontractors do not have to register but face deductions at a higher rate if they do not. Confusion usually arises over who counts as a contractor, who counts as a subcontractor and which types of work fall inside the scheme. We handle verification, monthly returns and the employment status questions that sit behind them.
Under the domestic reverse charge the customer accounts for the VAT on certain construction services rather than the supplier charging it. It applies to supplies reported under the Construction Industry Scheme between VAT registered businesses, and it does not apply where the customer is an end user. The practical effect is on cash flow, because suppliers no longer hold VAT between invoicing and their return. Applying it to the wrong invoices is one of the more common errors we correct.
In most cases yes. Commercial property and furnished holiday lets usually contain qualifying plant that was never separately identified at purchase, including heating, lighting, air conditioning, security systems and fitted kitchens. It does not matter how long you have owned the building or whether you built it yourself, and there is no time limit on identifying a claim you have not yet made. We will review the position and tell you whether there is a claim worth pursuing.
Yes. We act for sole traders, partnerships and limited companies across construction and property, from individual trades through to main contractors and developers. If you are trading as a sole trader and turnover is growing we will also tell you honestly whether incorporating is worth it in your situation, because it is not always the right answer.
Changing accountant is more straightforward than most people expect. You tell your current accountant you are moving, we write to them for professional clearance and the handover of your records, and we deal with the HMRC authorisations. You do not need to wait until your year end and there is no obligation to explain your reasons to anyone. Most transfers complete within a few weeks.
