If you run a construction business or work as a contractor in the trades, your accounting needs are genuinely more complicated than most. That is not an exaggeration — it is just the reality of operating in a sector that sits underneath the Construction Industry Scheme, employs subcontractors, deals with reverse-charge VAT, and often carries project-based cash flow that swings wildly from one month to the next.

In our experience, many trades and construction contractors are being served by generalist accountants who handle their year-end and not a great deal else. That might keep you compliant in a narrow sense, but it leaves a lot of value on the table. Specialist accountants for trades and construction contractors do something different — they understand the mechanics of your industry and apply that understanding year-round, not just in January.

This post sets out what that actually looks like in practice, and what has changed in 2026 that makes it worth paying attention to right now.

It is tempting to think that accounting is accounting — numbers go in, numbers come out, HMRC gets paid. But construction sits in a category of its own, and the Construction Industry Scheme (CIS) is the main reason why.

Under CIS, contractors are required to deduct tax at source from payments made to subcontractors and pass those deductions directly to HMRC. That creates an obligation that most businesses simply do not have. You need to verify each subcontractor with HMRC before you pay them, apply the correct deduction rate (20% for registered subcontractors, 30% for unregistered ones), issue monthly statements, and file monthly returns — whether or not you have made any payments that month.

On top of that, if your turnover exceeds the VAT registration threshold, you are likely operating under the domestic reverse charge for construction services. This is a VAT rule that flips who accounts for the VAT — and it catches a surprising number of contractors off guard when they first encounter it.

Then there is the cash flow reality. Construction projects are often invoiced in stages, retention money is held back for months, and subcontractor costs can be front-loaded. A generalist accountant looking at your year-end figures may not spot the pressure building in your working capital during a busy summer. A specialist one should.

The Construction Industry Scheme has been around since 1971 in various forms, but it still generates a steady stream of compliance problems for contractors who are not receiving specialist guidance.

The most common issues we see are:

• Failing to verify subcontractors before payment. If you pay a subcontractor without verifying their status with HMRC first, you may be liable for the tax that should have been deducted — even if the subcontractor pays it themselves. HMRC does not always give credit in these situations.
• Applying the wrong deduction rate. Getting this wrong either over-deducts from a subcontractor (creating friction and disputes) or under-deducts (leaving you exposed to a penalty).
• Missing monthly return deadlines. CIS monthly returns are due by the 19th of each month following the payment period. Late returns attract automatic penalties.
• Confusion about who is a contractor under CIS. Many businesses in adjacent sectors — property developers, facilities management companies, and some local authority suppliers — are caught by CIS rules without realising it.

A specialist accountant handles all of this as a matter of routine. Verification checks, deduction calculations, monthly filing — it is built into the process, not bolted on as an afterthought.

There were two significant changes to CIS that came into force on 6 April 2026, following a government consultation earlier in the year. Both are worth understanding.

Nil returns are now mandatory

From April 2026, if you are registered as a contractor under CIS and you have not made any payments to subcontractors in a given month, you are now required to file a nil return. Previously, many contractors simply did not file in quiet months and assumed HMRC would know nothing had been paid. That assumption is no longer safe. The only way to avoid the nil return obligation is to notify HMRC in advance that you will not be making subcontractor payments during that period — and that notification needs to happen proactively, before the deadline passes.

This change is more administrative than financial, but it is the kind of thing that generates automatic penalties if you are not on top of it. A specialist accountant will manage this as part of your monthly routine.

Payments to local authorities and public bodies are now exempt

The second change is more substantive for contractors who work on public sector projects. Payments made to local authorities or other specified public bodies are now exempt from CIS deductions under a new provision in the regulations (Regulation 24ZA, if you want the technical reference). This removes an administrative burden that applied to certain public-facing contracts and simplifies how those payments are handled.

If your work involves local authority contracts, this is worth discussing with your accountant to ensure your processes reflect the new rules correctly.

Beyond compliance, the right accountant for a trades or construction business should be doing several things that a generalist practice rarely has the bandwidth or familiarity to deliver.

Month-to-month cash flow visibility

Construction cash flow is lumpy. You might invoice £80,000 in March and collect £20,000 of it in April while paying subcontractors and suppliers in full. Management accounts and cash flow forecasting — done monthly, not just at year-end — give you the visibility to make decisions before a squeeze becomes a crisis.

Tax planning that fits your structure

Whether you operate as a sole trader, a limited company, or a combination of both, there are usually legitimate ways to reduce your tax exposure when your structure is set up thoughtfully. Timing dividend payments, making pension contributions, and understanding what you can claim on plant, equipment, and vehicles all make a material difference over a year.

Subcontractor payroll and CIS submissions

If you use subcontractors regularly, managing their verifications, deductions, monthly statements, and returns is a recurring task that needs doing correctly every single month. A specialist handles this as a core service, not a one-off.

Advice that reflects how the industry actually works

Retention periods, stage payments, materials purchased on behalf of clients, plant hire, and self-employment vs employment status for subcontractors — these are all construction-specific questions that a specialist will have encountered many times before. That experience translates into faster, more reliable answers.