Accountants for Construction in York

Why construction businesses need a specialist accountant

There’s more to keep on top of in construction than in most industries. It only takes one missing piece of the puzzle, and you could face penalties; get several wrong, and you’re looking at a real problem with HMRC.

CIS as a contractor is a filing job, not just a payment one. If you’re taking on subcontractors, there’s more to it than deducting CIS from their payments. Every month, you’ll be filing a return to HMRC that lists each subcontractor you’ve paid, what you paid them and how much you deducted. Late returns, or the wrong deduction rate, carry penalties that can soon mount up. If you’re with us, we’ll take care of the monthly returns, check your subcontractors with HMRC before you pay them, and keep the deduction rates right. The Construction Industry Scheme is manageable when it’s handled properly, and expensive when it isn’t.

The domestic reverse charge still trips businesses up. Since March 2021, VAT between VAT-registered businesses in the construction supply chain has worked differently. Rather than the supplier charging VAT, the customer accounts for it themselves. So if you’re supplying construction services to another VAT-registered business that’s going to use them for an onward supply, you won’t put VAT on your invoice. You’ll note that the reverse charge applies, and they’ll account for it. Getting it wrong, either way, can cause problems for both sides. We’ll get your invoicing set up properly, and keep an eye out for any invoices coming in that look like they’ve got the reverse charge rules wrong.

Retentions need careful handling. The money held back until practical completion, or the end of the defects period, is income you’ve earned but not yet been paid. It needs to be accounted for as a debtor, rather than being left out until the payment arrives. If it’s brought off the balance sheet too early, the cashflow picture can look rosier than it really is. If it gets left out altogether, you’ll be understating what you’re owed. Our team will look after retentions properly, both the ones being held from you and the ones you’re holding back from your own subcontractors, so your accounts and your tax reflect what’s really gone on.

Revenue on long projects shapes your tax position. A project that runs over many months, or even years, will need a careful eye at your year-end. How much of it counts as work in progress (the work you’ve done but not yet invoiced), and when that income gets recognised, will affect when the tax is due and how much your next bill is. We’ll go through the pipeline with you at year-end and apply the right treatment, so the figure reflects what’s really happened rather than whatever’s easiest to record.

Plant and equipment need the capital allowances handled properly. Most construction businesses have a fair bit of plant on the books. The Annual Investment Allowance lets you write qualifying purchases down against tax in the year you buy them, though hire purchase and finance leases work differently again. We’ll look after all of it, from the point you buy through to disposal, and give you a heads-up on any purchase where the timing could shift the relief into a better year.

How we work with construction businesses

No two construction businesses need exactly the same mix of services. A groundworks firm with a couple of employees and one main contractor is very different from a fit-out business juggling a dozen subcontractors across multiple sites. We’ll tailor our services to suit where you are now, and change things inline with your needs.

Staying in regular contact through the year will keep things moving. Whatever we’re looking after, you’ll have a specialist team on hand whenever something specific crops up: a new bit of plant you want to structure well, a reverse charge query on an invoice that’s just landed, a subcontractor asking why you deducted at 30% rather than 20%. If HMRC writes to you about anything, forward it on and we’ll either explain it or tell you to ignore it.

Records come through ShareFile, and we work with Xero, FreeAgent and Dext for clients on cloud bookkeeping. When your books are up to date, the monthly CIS return will stop being a headache.

The year-end meeting is where we’re most useful. We’ll walk through the year just gone, plan the next one, and shape your accounts and tax around what’s actually best for the business: retentions, work in progress, plant decisions, and what the forward order book means for next year’s bill.

If you’re already working with another accountant, moving over is more straightforward than most people expect, and our guide on how to change accountants walks you through it.