The construction industry is very changeable with varied hours, worker profiles and number of projects. Therefore, construction accounting must reflect the nature of the sector. Its unique blend requires construction businesses to be:
- Knowledgeable – for safety and compliance, operationally and financially.
- Protected – legally through your business structure and via the type and level of insurance.
- Tax Efficient – via thorough bookkeeping and accountancy
The UK construction industry works differently to other sectors when it comes to tax compliance. Getting the details right is important. There are important nuances involved with the construction industry accounting, such as:
- VAT domestic reverse charge (introduced March 2021) – must be used for most supplies of building and construction services. (Read more)
- Construction Industry Scheme (CIS) payment processing – whereby contractors deduct money from a subcontractor’s payments and pass it to HMRC.
In addition, contracts with suppliers within the industry must comply with regulations such as IR35.
Construction Accounting: the Key Differences
- Sales are typically spread across many categories of products/services
- Processing of expenses is more complex due to the varied number, location and duration of projects
- Various methods can be applied to calculate revenue, expenses and tax liability, such as Completed Contract Method or Percentage Completion Method.
At Spicer & Co Chartered Accountants we are lucky to have a construction specialist in our team. Steve Spicer, one of our directors, has over 20 years of construction industry experience. He has direct knowledge of the sector’s unique nature.
“Construction work is project-based, often involving several locations,” says Steve. “There are several regulations which construction companies must comply with, so accountancy support with first hand understanding of the sector is incredibly helpful.” An example of such regulations is Making Tax Digital an initiative changing how accounts and tax returns are submitted to HMRC.
Does your limited company work within the construction sector?
Would you like specialist support combining expert construction industry and accountancy knowledge?
Contact Spicer & co for an initial discussion without obligation. We appreciate that construction is unique. Discover how our industry knowledge can help your business.