Most Yorkshire construction Ltd directors who ring me for the first time have the same six-month-old problem. Their CIS suffered hasn't been offset properly since the last year-end, so HMRC is holding what should be their cash.
Their last VAT return had the Domestic Reverse Charge wrong on at least one invoice and they don't know which one. Their year-end is six months out, and their forecast corporation tax bill is anyone's guess within £20,000.
Sound familiar? I'm Sarah Bingham, AAT-qualified, and I've spent the last 25 years sorting out exactly that situation. I run Dearne Accountancy Services from Wath upon Dearne, working with construction Ltds in the £500k to £3m turnover range across Yorkshire.
Construction is what we do. CIS verifications and monthly returns. The Domestic Reverse Charge done properly. R&D claimed where it's hiding. The four monthly numbers that keep a profitable Ltd from going bust on a Friday. And it's the only kind of work we take on.
Why construction accounting is its own discipline
A general accountant can do your construction Ltd. Plenty do. In 25 years I've seen what gets missed when they do, and it's the same six things every time.
- CIS sits on top of normal payroll, not instead of it. Get it wrong and HMRC stack the penalties monthly.
- The Domestic Reverse Charge inverts how VAT flows on B2B construction services, and most generalists are still treating it as a one-off rule rather than the default.
- Retentions sit on your balance sheet as receivables you've already earned but won't see for another six to twelve months.
- Stage payments and work-in-progress make your year-end profit look nothing like your bank balance.
- R&D tax credits are buried in problems your team solves every week on site, and most construction firms still think the relief is for people in lab coats.
- The capital allowances regime changed twice in the last three years, with another shift on 1 April 2026 most contractors haven't been told about yet.
A generalist can file your accounts. A construction-specialist accountant files your accounts and finds the money the generalist is leaving in HMRC's pocket. That's the difference.
Who we work with (and who we don’t)
The firms we do our best work for look like this:
- You're a limited company turning over somewhere between £500k and £3m.
- You've got between 2 and 10 staff on the books, and you use CIS subbies on top.
- You're a main contractor, a subcontractor to bigger firms, or both at once.
- Your trade is one of: groundworks, bricklaying, drylining, M&E, civils, joinery, plant hire, roofing, or general contracting.
- You're based somewhere in South or West Yorkshire — Barnsley, Rotherham, Sheffield, Doncaster, Wakefield, Leeds, or one of the towns in between.
If that's you, we're the firm built for the work.
Who we're not the best fit for
If you're a sole trader who hasn't gone Ltd yet, our service is heavier than you need. I'll tell you that on the call and point you somewhere better.
If you're a £10m+ firm with your own internal finance team, you need a Big 4 alternative, not us. And if you're not in construction at all, we're probably not the right shop. I don't take on clients just to fill a roster.
CIS, done properly, every month
CIS is where most construction Ltds quietly lose money. Not through fraud, not through anything dramatic. Through small, repeated, monthly admin gaps.
Subbie verification
Every new subcontractor has to be verified with HMRC before you can pay them at the registered 20% rate. Skip the verification, or let it lapse after a two-year gap, and HMRC tells you to deduct 30%. The subbie chases you for the missing 10%. You chase HMRC. Months disappear.
Monthly CIS300 returns
Due by the 19th of the following month. Late filing starts at £100 and stacks fast. We file every CIS300 ourselves, on time, and we tell you what’s on it before it goes. See our full CIS returns service or the 2026/27 CIS tax guide if you want the deep dive.
CIS suffered for subcontracting Ltds
This is the big one. If you're a Ltd that gets paid by larger contractors with CIS deducted from your invoices, that deducted tax can be offset monthly against your PAYE/NIC bill through the Employer Payment Summary.
Most accountants wait until year-end to reconcile it. That's a year of your money sat with HMRC when it could have been in your account every month. We file the EPS monthly. The money offsets in real time. The leftover gets refunded at year-end. We've written more on how much CIS tax refund you can claim back.
Gross Payment Status
If your turnover, compliance and business tests stack up, you can apply for GPS, and your contractors pay you in full with no CIS deducted.
Recent legislation has tightened HMRC's powers to refuse or remove GPS where a firm is caught up in a tax-fraud chain, even unwittingly.
Worth being briefed on the compliance position before you apply, and worth keeping a close eye on if you've already got it.
Penalty appeals
If you're sitting on late-filing penalties already, a properly-worded “reasonable excuse” appeal can clear them. The wording matters. I'll write the appeal letter myself.
CIS deduction rates for 2026/27
For the record — unchanged from last year, easy to verify, easy to get wrong if no-one’s watching. Source: GOV.UK CIS contractor guidance.
| Subcontractor status | Deduction rate | When it applies |
|---|---|---|
| Registered for CIS | 20% | Most subcontractors. Verified with HMRC before first payment. |
| Not registered | 30% | Subcontractor isn't on HMRC's CIS register, or verification has lapsed. |
| Gross Payment Status | 0% | Subcontractor has applied for and been granted GPS — paid in full. |
VAT and the Domestic Reverse Charge
The Domestic Reverse Charge has been live since March 2021, and HMRC updated VAT Notice 735 as recently as March 2026. Which tells you it's still being clarified, still being argued over, still being got wrong.
The headline: for B2B construction services where both parties are VAT-registered and the work falls within the CIS scope, the customer accounts for VAT on the supply, not the supplier.
Your invoice goes out with no VAT charged. The customer self-accounts for output and input VAT in the same return. The mechanic is fine once you’ve seen it three times. The problem is the edges.
The end-user rule
If your customer is the end user of the services, meaning they're not on-selling, they're consuming the work themselves, DRC doesn't apply. Normal VAT does. They have to tell you they're the end user in writing.
The 5% disregard
If a contract is mostly DRC-applicable but has a small non-applicable element, the whole supply is treated as DRC as long as that element is under 5%. Useful. Often missed.
Plant hire with operator vs without
Different VAT treatment depending on who controls the kit. We see this misclassified all the time.
What I find when I look at a year of returns from a firm that's had DRC wrong: an HMRC error-correction notice and a refund. Sometimes a five-figure one. Look properly. Every year. At everything. More on our VAT returns service.
R&D tax credits: the money most construction firms haven’t claimed
This is the part of the page most readers will skim. Don’t. R&D tax credits are the single largest pot of relief most Yorkshire construction Ltds have never touched, and the thinking that keeps them out of it is always the same: “we don't do research, we build things.”
What HMRC actually counts as R&D in construction is closer to this — solving a technical problem where the answer wasn't already in the public domain:
- Modern Methods of Construction
- Retrofit projects on old housing stock where the standard detail won't work
- Sustainability and Part L compliance where you've had to engineer the solution
- Site-specific groundworks where the soil report forced you off the textbook
- New materials or new methods that needed testing on the job
If your team has ever spent a fortnight figuring out how to make something work that wasn't in the spec, the cost of that fortnight might qualify.
The scheme
For accounting periods starting on or after 1 April 2024, the merged R&D Expenditure Credit (RDEC) scheme replaced the old SME and RDEC routes. The credit rate is 20% of qualifying expenditure, taxable, which works out at roughly 16p of cash benefit per £1 of qualifying spend for most profitable Ltds.
The traps
Pre-notification. If it's a first claim, or you haven't claimed in the last three years, HMRC needs to know within six months of the period end that a claim is coming.
Miss that, the claim is dead before you write it. And the Additional Information Form has to land with HMRC before the claim itself, with the right technical detail. Get the AIF wrong, claim rejected.
The honest pitch
The first call is a 30-minute scoping call to find out whether you've got a claim worth making. If there's nothing there, I'll tell you, and we won't take any more of your time. If there is, we agree the fee before we start, and we don't take a cut of the relief.
Retentions, cashflow and the four numbers you need every month
Construction is the only industry where a profitable year-end set of accounts can sit next to an empty bank account, and both can be accurate.
The reasons are well-known and chronically under-managed:
- Stage payments lag the work.
- Retentions sit on your balance sheet as receivables for six to twelve months.
- Work-in-progress is real cost you've spent that hasn't hit a sales invoice yet.
- Subbie payments hit weekly while customer payments come in monthly or worse.
The annual P&L shows you what happened. It doesn't show you what's about to happen.
The four numbers we send by the 15th
- Gross margin by job type. Not the firm-wide gross margin. Broken out by type of work, so you can see which projects are paying and which are propping up the others.
- Retentions schedule. Every retention held against you, when it's due back, who's chasing it. Money you've earned, separately tracked from money you've billed.
- Forecast corporation tax. Updated monthly so the year-end CT bill is never a surprise. We adjust for salary-versus-dividend planning, R&D claims pending, and capital allowances timing.
- 13-week cash position. A rolling forecast of bank balance week-by-week for the next 13 weeks. The single most useful number you'll have. If it's going red in week 8, we tell you in week 1.
That's a management accounts package. It costs more than basic year-end work. For a £500k to £3m construction Ltd, it usually pays for itself in the first six months from the things you stop missing.
Capital allowances and the 2026/27 changes you need to know
There's a quiet capital-allowances story happening in 2026 that most construction directors have not been told about. Source: GOV.UK Budget 2025 rates and allowances.
| Allowance | Rate | Notes |
|---|---|---|
| Annual Investment Allowance (AIA) | 100% up to £1m | Covers vans, plant, tools, site kit. Capped per company per year. |
| Full Expensing | 100%, uncapped | Limited companies only. Main-rate plant and machinery. Runs alongside AIA. |
| New 40% main-rate FYA (from 1 Jan 2026) | 40% | For cases full expensing doesn't reach — leased assets, unincorporated businesses. |
| Main pool WDA (from 1 Apr 2026) | 14% | Cut from 18%. Applies to anything that doesn't get Full Expensed or AIA'd in year. |
The cut in the main-pool writing-down allowance from 18% to 14% makes the timing of plant purchases matter more this year than last. Buying a piece of plant and bringing it into use before your year-end can be the difference between a 100% deduction and a 14% one.
How we work, and what it costs
The process is the same for everyone who hires us.
A free 30-minute call
You tell me what your firm does, what your last accountant got right and wrong, and what you'd like to be different. I tell you what I'd do differently and roughly what it'd cost. If it's not a fit, I'll tell you that too.
A scoped quote
After the call, you get a written quote. Fixed monthly fee for the recurring work: CIS, VAT, payroll, management accounts, year-end. One-off pieces of work like an R&D claim, a Companies House cleanup, or an HMRC enquiry get quoted separately and agreed before we start. No surprise bills. Ever.
The switch
If you're with another accountant already, we handle the handover ourselves. Professional clearance letter, records request, software migration, opening balances.
Most of our new clients are switching from someone else. It's standard, and it's easier than most people expect. You don't need to wait until year-end either.
Then the work itself
Month-end management accounts by the 15th. CIS300 filed by the 19th. VAT returns done a week before they're due. Year-end accounts produced and reviewed with you, not just emailed at you. AAT-qualified, HMRC-registered, with a named accountant on every job — me.