The construction sector is a cornerstone of the UK economy, contributing over £110 billion annually and employing millions of workers across various trades and professions. Yet, behind the scaffolding and site management lies a complex web of tax regulations, subcontractor arrangements, fluctuating cash flow, and volatile profit margins. For construction businesses in Swinton, Salford, and across Greater Manchester, these financial intricacies demand more than standard accounting services—they require industry-specific expertise.
Why General Accountants May Fall Short
While general accountants are equipped to handle basic compliance tasks like filing tax returns or preparing annual accounts, the construction industry operates under a unique financial framework that demands deeper insight. Issues such as the Construction Industry Scheme (CIS), employment status checks, project-based costing, and VAT reverse charges are just some of the specialised areas that require precise handling.
A lack of sector knowledge can lead to:
- Incorrect or delayed CIS filings, which can result in penalties from HMRC
- Misclassification of subcontractors, risking employment law violations
- Poor forecasting of project profitability, jeopardising business sustainability
- Missed tax relief opportunities, reducing working capital
In short, without an accountant who truly understands construction, companies risk non-compliance, reduced margins, and diminished growth potential.
Understanding the Construction Industry Scheme (CIS)
One of the most complex areas for construction businesses is compliance with HMRC’s Construction Industry Scheme (CIS). Under CIS, contractors must deduct money from a subcontractor’s payments and pass it to HMRC. This deduction counts as advance payment towards the subcontractor’s tax and National Insurance.
Managing this accurately requires:
- Verifying subcontractor registration with HMRC
- Correctly calculating and deducting CIS tax
- Submitting monthly CIS returns
- Issuing payment and deduction statements
Mistakes here can trigger penalties, cash flow issues, and even HMRC investigations. A specialist chartered accountant ensures your CIS obligations are met seamlessly while identifying areas for efficiency.
Strategic Tax Planning and Reliefs
Construction firms face unique tax planning challenges. From capital allowances on plant and machinery to R&D tax credits for innovative building techniques, there are various ways to optimise your tax position.
Specialist accountants bring value by:
- Advising on VAT schemes such as the VAT Domestic Reverse Charge
- Structuring dividends and salaries for directors efficiently
- Reviewing asset purchases to maximise capital allowances
- Exploring eligibility for R&D tax relief
- Ensuring compliance with Making Tax Digital (MTD) for Income Tax
These strategies not only reduce tax liabilities but also create a roadmap for sustainable growth.
Explore Making Tax Digital at GOV.UK
Managing Cash Flow and Profit Margins
In construction, it’s not just how much you earn but when you receive it. Delayed payments, retentions, and staged invoices can severely impact cash flow. Specialist accountants help construction firms develop cash flow forecasts that reflect real project timelines, enabling better financial planning.
They also:
- Allocate costs accurately per project
- Identify underperforming jobs early
- Benchmark performance against industry averages
- Offer insight into labour productivity and overheads
These insights allow business owners to make informed decisions and protect their margins in an unpredictable environment.
Employment Status and IR35 Compliance
With a heavy reliance on subcontractors and self-employed workers, construction firms must stay compliant with IR35 legislation. Getting this wrong could lead to reclassification of contractors as employees and backdated tax liabilities.
A construction-savvy accountant can:
- Conduct employment status reviews
- Assist with drafting compliant contracts
- Help mitigate risks from recent HMRC updates and case law
The Value of Local Expertise
At Co-gency Chartered Accountants, we combine national expertise with local insight. Based in the heart of Swinton and serving clients throughout Salford and Greater Manchester, we understand the regional construction landscape and tailor our advice to your business’s specific challenges.
We offer:
- Dedicated CIS and payroll support
- Proactive tax planning throughout the year
- Digital solutions to meet MTD requirements
- Financial leadership and strategic guidance
Our goal is to help construction businesses not only stay compliant but thrive.
Why Choose Co-gency Chartered Accountants?
Working with an accountant who specialises in construction is not a luxury—it’s a necessity. At Co-gency, we provide a full suite of construction-specific accounting services designed to optimise your tax position, protect your profits, and reduce your compliance risks.
Whether you’re a sole trader, a growing subcontractor, or managing multiple large-scale developments, we provide the clarity and confidence to navigate your financial obligations.
Need expert support for your construction business?
Contact our team today or explore our services to find out how we can help.