Construction and CIS

The compliance is relentless and the margin hides in the jobs.

CIS, the reverse charge, retentions and gross payment status. Construction has more ways to get the compliance wrong than almost any other sector, and the numbers that matter are buried at job level rather than in the profit and loss.

What we see

The pattern in this sector.

Construction is the sector where the compliance burden and the commercial question pull hardest in opposite directions. The CIS returns land monthly whether or not the job is going well. Verification, deduction statements and the reverse charge all have to be right. Meanwhile the thing that decides whether the business makes money is happening somewhere else entirely, at job level, and usually is not being measured.

Most contractors we meet can tell us their turnover and their bank balance. Very few can tell us which of last year's jobs made money and which quietly did not. Materials go on one account, subcontractors on another, plant hire on a third, and the profit and loss shows a single blended margin that averages the good jobs with the bad ones. Job-level reporting is where the answer is, and it is the main reason construction clients end up on live reporting.

The other pattern is cash. Retentions held for months, applications for payment rather than invoices, and a VAT position that moves with the reverse charge. A construction business can be profitable and still be unable to pay itself, and the two problems have different fixes.

Watch outs

Where it goes wrong.

Gross payment status. It is worth real money and it is lost on compliance failures rather than on trading performance. Late returns and late payments both count. Losing it means 20% of every payment held back at source, which is a cash flow problem long before it is a tax problem.

The domestic reverse charge. Introduced in 2021 and still applied incorrectly more often than any other VAT rule we see. It applies between VAT-registered businesses in the CIS chain and not to end users, and getting the end user question wrong in either direction causes problems.

Verification. Every new subcontractor must be verified before payment. Paying at the wrong deduction rate because nobody verified is a correction and a penalty rather than an inconvenience.

Employment status. A long-standing subcontractor working set hours under supervision may not be a subcontractor at all. HMRC take an interest, and the cost of being wrong sits with the contractor.

What we do

The whole job, on a fixed monthly fee.

Business accounting

Year-end accounts, corporation tax, VAT and payroll, done properly and done early.

Bookkeeping

In-house bookkeepers alongside the accountants, so the numbers are current rather than annual.

Live reporting

Margin by job, product or client, refreshed rather than rebuilt. Where the sector-specific answers actually live.

Finance Partner

A whole finance team on one fixed monthly fee, when you need more than compliance.

Talk to someone who has seen it before.

A first conversation costs nothing and takes about half an hour. We will tell you what we would do and what it would cost.