The construction industry is a cornerstone of the UK economy, contributing over £110 billion annually and employing more than two million people. Yet, it is also one of the most complex sectors when it comes to accounting and financial management. From navigating fluctuating project costs to staying compliant with evolving tax legislation, construction businesses face a unique set of challenges that demand tailored accounting expertise.
At Co-gency Chartered Accountants, we understand the intricacies of the construction sector. Our team provides specialist accounting services to construction businesses across Swinton, Salford, and Greater Manchester. In this blog, we explore the most pressing financial challenges in the construction industry and how Co-gency helps firms manage their finances effectively and compliantly.
1. Navigating Complex Cash Flow Cycles
Construction businesses often deal with long project timelines, staged payments, and retentions, which make cash flow management particularly difficult. Even profitable companies can face financial instability due to delayed payments or unforeseen project expenses.
How Co-gency helps:
We provide cash flow forecasting and management services tailored to construction firms. Our financial modelling tools help clients anticipate income and expenses, ensuring they remain financially stable even during lengthy projects or economic downturns.
2. Project-Based Accounting and Cost Allocation
Unlike many other industries, construction accounting must be project-specific. Accurately tracking the income, expenses, and profitability of each project is vital to evaluating performance and maintaining control.
How Co-gency helps:
We implement job costing systems and software integration that allow clients to monitor project-specific costs in real-time. This enables better decision-making and ensures that profitability can be assessed accurately across the lifecycle of each job.
3. CIS (Construction Industry Scheme) Compliance
Under the Construction Industry Scheme (CIS), contractors must deduct money from subcontractor payments and pass it to HMRC. This requires detailed record-keeping and timely submissions to remain compliant.
How Co-gency helps:
We assist construction businesses in managing all aspects of CIS, including registration, verification, monthly returns, and deduction statements. By ensuring full compliance, we help avoid penalties and build confidence in HMRC audits.
For more information on CIS, refer to HMRC’s official guide:
Construction Industry Scheme (CIS) – GOV.UK
4. Payroll and Employment Status Issues
Many construction companies employ a mix of full-time staff, contractors, and subcontractors, which adds complexity to payroll processing and tax treatment. Misclassifying workers can result in significant financial penalties.
How Co-gency helps:
Our team ensures that employment status determinations align with current HMRC guidance and supports businesses with accurate payroll processing, pension contributions, and compliance with Real Time Information (RTI) reporting requirements.
5. Managing VAT Effectively
The introduction of the VAT reverse charge for construction services has significantly altered how VAT is reported and accounted for in the industry. Misunderstanding these rules can lead to cash flow problems and HMRC scrutiny.
How Co-gency helps:
We guide clients through the reverse charge mechanism and ensure their VAT accounting procedures are updated accordingly. This includes helping with software adjustments and HMRC communication to ensure full compliance.
For detailed guidance on the VAT reverse charge, consult:
VAT domestic reverse charge for building and construction services – GOV.UK
6. Dealing with Tax and Regulatory Changes
Construction businesses must stay updated with regulatory changes, such as Making Tax Digital (MTD), changes in corporation tax rates, or updates to allowable expenses.
How Co-gency helps:
Our proactive tax planning services ensure that clients are always prepared for upcoming legislation. We assist with MTD compliance, corporation tax optimisation, and strategic structuring to reduce tax liabilities while maintaining full compliance.
For more information on Making Tax Digital, visit:
Making Tax Digital for Income Tax – GOV.UK
7. Long-Term Strategic Planning
Construction businesses often focus on project execution and short-term objectives. However, without long-term financial planning, companies may struggle to scale sustainably or respond to market shifts.
How Co-gency helps:
We work closely with construction clients to develop long-term financial strategies, including capital investment planning, succession planning, and scenario modelling. This empowers business owners to make informed decisions for sustainable growth.
Explore our full range of services:
Construction Sector Services – Co-gency
Why Choose Co-gency?
Co-gency Chartered Accountants brings a wealth of sector-specific knowledge to support construction businesses in Swinton, Salford, and across Greater Manchester. We combine local insight with technical expertise to provide actionable accounting solutions that align with the operational realities of construction.
Whether you’re a small subcontractor, a regional contractor, or a rapidly growing developer, our personalised service ensures you have the tools and guidance to remain compliant, profitable, and future-ready.
Contact our team today to discuss how we can support your construction business:
Contact Co-gency