Construction Accountants for CIS Contractors

A CIS deduction statement can show a sizeable amount taken from a payment, but that does not automatically mean you will receive all of it back. For subcontractors, construction accountants make the difference between treating those deductions as a confusing cost of working and using the right records to settle your tax position properly.

Construction work rarely follows a neat monthly pattern. One month may include several sites, a late payment, materials bought upfront and travel across London or Surrey. The next may be quieter, with money held back as retention. Your accounts need to reflect what is actually happening in the business, not just what happens to be sitting in the bank on the last day of the month.

Why construction accounting needs specialist knowledge

The Construction Industry Scheme is straightforward in principle, but the detail matters. Contractors deduct tax from labour payments and send the deduction to HMRC. If you are registered correctly, deductions are usually made at 20%. Without registration, they can be 30%. Those deductions are payments towards your tax bill, not a final calculation of what you owe.

That distinction is where many subcontractors get caught out. A refund may be due if deductions and other payments exceed the final tax liability. Equally, a refund is not guaranteed simply because CIS has been deducted. Your self assessment return looks at the full picture: construction income, allowable business expenses, other earnings, pension contributions and any tax already paid.

A good accountant should also understand the operational side of the trade. You may move between contractors, pay for tools before a job starts, use your own vehicle every day and work away from your normal base. The question is not whether an expense sounds work-related. It is whether it is allowable, supported by records and claimed in the right proportion.

What construction accountants should do for you

The right support should save time during the year as well as at tax return time. For a sole trader or subcontractor, this usually begins with organising income records, checking CIS statements and keeping a clear record of expenses. It should then lead to an accurate self assessment return, with any CIS overpayment claimed where the figures support it.

For limited companies, the work can be broader. Company accounts, corporation tax, director pay, payroll, VAT and subcontractor payments may all need attention. If your company pays subcontractors, it has its own CIS responsibilities, including verifying workers where required, making the correct deductions and filing monthly CIS returns by the deadline.

Construction accountants should be able to explain what needs doing in plain English. You should know what documents to keep, what tax money to set aside, when a deadline is approaching and why a particular expense has or has not been claimed. That is more useful than receiving a set of accounts after the year has finished with no discussion of what they mean.

CIS deductions and tax refunds

Keep every monthly deduction statement supplied by contractors. These statements are evidence of tax deducted at source. Missing statements, incorrect names or deductions recorded against the wrong Unique Taxpayer Reference can delay a return or make it harder to obtain credit for tax already paid.

It is worth checking statements as they arrive rather than leaving a carrier bag of paperwork until January. Compare the labour payment and deduction with your own invoice or payment record. If something does not match, raise it with the contractor promptly while the job and payment are still easy to trace.

Where a contractor is late issuing a statement, an accountant can advise on the best records to retain and how to deal with the discrepancy. Guessing figures on a tax return is never a sensible shortcut. HMRC can ask for evidence, and errors can hold up a repayment.

Expenses that need a sensible approach

Many genuine costs are missed because people assume an accountant will somehow know about them. Others are claimed too aggressively because the line between business and personal use has not been considered. Both can create problems.

Common costs for a construction subcontractor can include tools and their repair, protective clothing, site parking, accountancy fees, business insurance, trade subscriptions, advertising, mobile phone use and certain travel costs. Mileage may be relevant where you use your own vehicle for qualifying business journeys. Materials can be more complicated, particularly where a contractor provides them, reimburses them or treats them differently under CIS.

Travel is one area where circumstances matter. Travelling to a temporary workplace may be allowable, while ordinary commuting to a permanent workplace is not. If you work at multiple sites, keep a diary or calendar alongside mileage and receipts. It gives your records context if questions arise later.

For shared costs such as a mobile phone, internet connection or home working, only the business proportion should be claimed. A reasonable method, applied consistently, is better than a figure chosen because it produces the largest deduction.

VAT, reverse charge and cash flow

VAT can become a major issue before a construction business feels particularly large. Registration may be compulsory once taxable turnover passes the current threshold, but voluntary registration can sometimes make commercial sense earlier. It depends on the type of customers you have, the VAT you pay on costs and whether adding VAT affects your competitiveness.

The domestic reverse charge for building and construction services adds another layer. In the right circumstances, the customer accounts for VAT rather than the supplier charging and collecting it in the usual way. It does not apply to every construction invoice, and getting it wrong can affect both cash flow and VAT returns.

This is why bookkeeping should not be treated as a year-end chore. Up-to-date records show who owes you money, what VAT is due and whether a tax payment is likely to put pressure on the business. They also make it much easier to spot when retention is building up or a contractor payment is overdue.

If you are VAT registered, your accounting records must be maintained digitally and VAT returns submitted through compatible software under Making Tax Digital rules. For self-employed people and landlords, Making Tax Digital for Income Tax is also being phased in based on qualifying income thresholds. The exact obligation depends on your circumstances, so it is better to check early than wait for HMRC correspondence.

Choosing an accountant who understands the job

Price matters, particularly when work is uneven, but the cheapest quote is not always the lowest-cost option. An accountant who does not understand CIS may spend longer unpicking statements, overlook a compliance point or give generic advice that does not fit how you work.

Look for someone who asks practical questions. Are you a subcontractor, a contractor, or both? Do you operate as a sole trader or through a limited company? Are deductions being made correctly? Do you have other income, employees, a VAT registration or plans to buy equipment? Those answers shape the advice.

You should also expect clear boundaries. A dependable accountant will not promise a refund before reviewing the figures, tell you to claim personal costs as business expenses or ignore deadlines because a contractor has been difficult. Sound advice is sometimes cautious, but it protects you from penalties, interest and unnecessary stress.

For clients in construction, Short And Sons Accountants Ltd combines the technical side of tax with an understanding that your priority is getting paid, finishing the job and moving on to the next one. The accounts process should fit around that reality, not add another layer of hassle.

The best time to get your records in order is not when the self assessment deadline is a few days away. Keep CIS statements, invoices and expense evidence as you go, ask questions before making a costly decision, and let your accountant turn the paperwork into a clearer view of what you have earned and what you need to do next.