CIS accounting

CIS compliance and tax accounting for property developers.

Property developers occupy an unusual position in CIS: many do not think of themselvesruction businesses, yet once their annual construction spend crosses £3 million they become deemed contractors under the scheme and all the same obligations apply. Below that threshold, developers who engage contractors directly still need to understand when those payments are within CIS scope and when they are not. Layer in the VAT domestic reverse charge, new-build zero-rating, and the distinction between development activity (within CIS) and property investment (outside it), and the tax picture for a property development company is genuinely complex.

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£3 million

Deemed contractor spend threshold per year

VAT rate on new-build residential (zero-rated, outside DRC)

25%

Corporation tax main rate (profits over £250,000)

The specific challenges

What makes property developers accounting different.

The deemed contractor threshold

A business that is not in the construction industry but spends £3 million or more on construction operations in any 12-month period is a 'deemed contractor' under CIS. This catches property developers who buy sites, engage construction firms and sell completed units: the construction spend on a single large scheme can cross £3 million easily. Once the threshold is crossed, the developer must register for CIS, verify all subcontractors before payment, file monthly CIS300 returns and deduct at the correct rate from every subcontractor payment. Missing the deemed-contractor trigger is a common and expensive oversight.

Developer versus investor: the CIS boundary

CIS applies to construction operations, which means work on property that is being built or altered for sale or development. It does not apply to property investment businesses whose construction spend relates purely to maintaining or repairing investment properties they hold as landlords. The distinction matters because it determines whether a particular tranche of construction spend triggers CIS obligations. Many businesses straddle both activities and need a clear analysis of which spend sits on which side of the line.

VAT domestic reverse charge versus new-build zero-rating

The VAT domestic reverse charge applies where both supplier and customer are VAT-registered and CIS-registered, and the customer is not the end user. A property developer building for sale is typically the end user for VAT purposes, meaning the reverse charge does not apply and subcontractors charge VAT in the normal way. On new-build residential work, the zero-rate applies to the construction services themselves: the subcontractor charges 0% VAT and the developer does not pay input tax to recover. Confusing these two positions creates both over- and under-declared VAT.

How we help

What we do for property developers.

Deemed contractor assessment and CIS registration

We assess your annual construction spend across all projects, identify when the £3 million threshold is crossed or at risk of being crossed, and manage CIS registration and the full contractor-side compliance cycle: verification, monthly CIS300 returns, nil returns and deduction statement issuance. We flag the threshold in advance so you are not caught by a retrospective obligation.

Developer/investor boundary analysis

We analyse your construction spend across development activity and investment property maintenance, map it against the CIS boundary, and give you a clear position on which payments are within scope and which are not. Where mixed-activity development companies need both treated separately, we maintain the records that support the distinction.

VAT and DRC compliance on development projects

We advise on the correct VAT treatment for each stream of construction services you receive: end-user developer (normal VAT, subcontractors charge), new-build residential (zero-rated), and any reverse-charge scenarios where they genuinely apply. We review subcontractor invoices for incorrect VAT treatment and correct errors before they reach your VAT return.

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Questions from property developers

We are not a construction company. Does CIS apply to us?

It can. If your business spends £3 million or more on construction operations in any 12-month period, you are a deemed contractor under CIS and the full contractor-side obligations apply: you must register, verify subcontractors before paying them, deduct at the correct rate, file monthly CIS300 returns and issue deduction statements. The deemed-contractor rule exists specifically to capture non-construction businesses, including property developers, that commission significant construction work. We assess your spend position and tell you clearly where you stand.

Our subcontractors are sending us invoices with standard 20% VAT. Should they be using the reverse charge?

Not necessarily. The domestic reverse charge applies only when all five conditions are met simultaneously: the supply is a specified CIS service, both parties are VAT-registered, both are CIS-registered, the customer is not the end user (they will on-sell the construction services), and the supply is standard- or reduced-rated. If you are a developer building for sale, you are generally the end user for VAT purposes, so the reverse charge does not apply and subcontractors should be charging standard VAT in the normal way. On new-build residential work, the zero rate typically applies instead. We review your supplier base and flag any invoices that are applying the wrong treatment.

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Talk to a specialist property developers accountant

Book a free call. We will talk through your CIS position, your deduction history and whether there is anything worth changing. No hard sell, no obligation.

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Specialist in CIS and construction accounting, not a generalist practice

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24-hour response guarantee

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Fixed fees, quoted before we start

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