№ 02 — CONSTRUCTION & CIS

Building is the easy part. CIS and the reverse charge are not.

A UK construction firm is two businesses in one. There's the work on site — and there's the Construction Industry Scheme behind it: every subcontractor verified with HMRC, deductions taken from labour but never materials, a payment and deduction statement owed to each one every month, a CIS300 return due whether or not you paid anyone, and — since 1 March 2021 — sales invoices that must carry the VAT domestic reverse charge instead of the VAT you used to add. Navigare puts the second business inside the first, so the scheme runs off the same records as the job.

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CIS handled ✦ Reverse charge built in ✦ All-in £189/mo
THE PROBLEM

The job finished on time. The paperwork is six weeks behind.

Most of what HMRC asks of a contractor happens after the concrete has set, in a spreadsheet, late at night, from memory. Get one figure wrong and the deduction is wrong; forget one statement and you've breached the scheme; mis-rate one invoice and the VAT is yours to argue with. None of it is hard — it is just relentless, monthly, and unforgiving of a slip.

i

CIS deductions done by hand

You owe a subcontractor £5,550 — but how much do you actually pay? Strip out the materials, take 20% (or 0%, or 30%) of the labour, and pay the balance to HMRC. Do that on a calculator across a dozen subbies every month and a single fat-fingered figure becomes an under-deduction you carry.

ii

The statement you forgot to send

Every subcontractor you deducted from is owed a payment and deduction statement within 14 days of the tax month end. Miss it and you've breached the scheme — but it lives nowhere except your good intentions, so the month a job runs hot is the month it slips.

iii

CIS300 re-keyed on the portal

Once a month you copy every payment and deduction into the HMRC Government Gateway by hand — a monthly return that's due even in a month you paid no one. Re-typing figures you already hold is both wasted time and a fresh chance to transpose a number.

iv

Reverse-charge invoices that aren't

Since 1 March 2021 most construction-to-construction supplies fall under the VAT domestic reverse charge: you don't charge the VAT, the customer accounts for it, and the invoice must say so. Off-the-shelf accounting bolts standard VAT onto everything — and an invoice missing the statutory wording is one you'll be reissuing.

v

Retention released on a hope

Five per cent held back, due at the end of the defects-liability period — but only once the snags are closed. With the snag list in one place and the retention schedule in another, money goes out before the defects are signed off, or sits unclaimed long after they are.

vi

"Is this subbie even verified?"

Pay an unverified subcontractor at the wrong rate and the shortfall is your liability, not theirs. Verification status and UTRs scattered across emails and a contacts app mean you're guessing at the rate when the payment run can't wait.

HOW NAVIGARE SOLVES IT

One system that knows the scheme — so you don't have to.

Built on Odoo Community with our construction vertical on top: sites and projects, estimates and interim valuations, a CIS engine that splits labour from materials and deducts at the verified rate, statutory payment and deduction statements, CIS300 returns wired to HMRC's Transaction Engine, subcontractor verification, the VAT domestic reverse charge applied on the right invoices, snagging tied to retention release and a RIDDOR-aware site diary — all in the all-in monthly price.

The principle: the scheme runs off the job, not off a spreadsheet. When you record what you paid a subcontractor, Navigare already knows their verification status, takes the deduction from labour alone, builds the statement they're owed and lines the figure up for the month's CIS300. When you invoice another contractor, it reads the customer's flags and proposes the reverse charge before you send. The compliance stops being a separate, fragile, after-hours job — it falls out of the work you've already done.

THE CIS ENGINE

CIS deductions, statements and returns — without the spreadsheet.

This is a real payment to a subcontractor inside Navigare. Record the gross, mark what's labour and what's materials, and the deduction computes itself at the verified rate — then carries straight through to the statement and the monthly return. Here is exactly what the screen does, and exactly where the honest edges are.

your-firm.navigare.space · CIS · Payment to subcontractor
A CIS payment to a subcontractor: gross £5,550 split into £4,200 labour and £1,350 materials, with a 20% deduction of £840 taken from labour only and a net payment of £4,710.

A real CIS payment: gross £5,550 = £4,200 labour + £1,350 materials. The deduction is 20% of labour only — £840 — leaving a net payment of £4,710. The materials are never touched.

Domestic reverse charge · VAT

The reverse charge, proposed before you send.

Three flags on the customer record — CIS-registered, VAT-registered, end user — drive it. When the supply is construction-to-construction and the customer is not the end user, Navigare flags "Domestic reverse charge applies" on the sales invoice automatically.

The invoice then carries the statutory wording — Reverse charge: Customer to account to HMRC for the VAT — and shows the VAT rate and amount for reference, sitting outside the invoice total. You charge no VAT; the customer accounts for it. (VAT Notice 735 / SI 2019/892, in force 1 March 2021.)

CIS deduction · labour only

Materials never get deducted.

The deduction is taken from the labour element alone — materials are excluded entirely, exactly as the scheme requires. The rate follows the subcontractor's verified status: 0% gross, 20% registered, 30% unverified.

On the screenshot above: £4,200 labour × 20% = £840 deducted; the £1,350 of materials passes through untouched; the subcontractor is paid £4,710 net and HMRC is owed the £840.

Payment & deduction statement

The monthly statement, generated, not remembered.

Every deduction produces the statutory monthly payment and deduction statement as a PDF for the subcontractor — the document the Income Tax (Construction Industry Scheme) Regulations 2005 require you to issue.

It carries the contractor's and subcontractor's UTR, the verification number, the tax month, and the gross / materials / labour / rate / amount deducted — so the subbie can reclaim, and you can prove you issued it.

CIS300 · verification · HMRC

Returns and verification, filed from the figures you hold.

The monthly CIS300 is assembled from the payments already recorded and submitted to HMRC's Transaction Engine over the Government Gateway (GovTalk). Subcontractor verification runs the same way, returning the rate and verification number against the record.

No re-keying on the HMRC portal — the return is built from what the job already produced.

An honest word on HMRC filing. Submissions run in test mode by default — the system is sandbox-ready out of the box. Going live is a deliberate step: you enter your own Government Gateway credentials (Sender ID and password, issued by HMRC) in Settings, and switch test mode off. We won't pretend a live HMRC connection exists before you've supplied the keys that make one possible.

KEY FEATURES

Everything a building firm runs on, nothing it doesn't.

🏗
Sites & projects
  • Every site with its contract value, client and current stage
  • From on-site through practical completion, snagging and final account
  • Costs, valuations and the retention schedule held against the job
  • One place to see what each project is actually worth today
📐
Estimates & valuations
  • Build an estimate line by line — labour, materials, plant
  • Raise interim valuations against progress as the job runs
  • A printable valuation document for the client and the file
  • The agreed figure flows into invoicing, never re-typed
💷
CIS engine
  • Deductions from labour only — materials always excluded
  • 0% / 20% / 30% by the subcontractor's verified status
  • Statutory monthly payment & deduction statements as PDFs
  • CIS300 returns and verification over the Government Gateway
📋
Snagging & retention
  • Raise and track every snag against the site
  • An open snag at practical completion blocks retention release
  • The client's sign-off unlocks the corresponding retention slice
  • Money held and money released, both tied to the defects list
⚠
Site diary & RIDDOR
  • A daily site diary: weather, labour on site, deliveries, delays
  • Log incidents with severity, against the right site
  • Major injuries, dangerous occurrences and fatalities flagged RIDDOR-reportable
  • A weekly digest, so nothing on site goes unrecorded
👷
Subcontractors & portal
  • Subcontractor records with UTR and verification status
  • The correct CIS rate proposed at the payment run
  • Built on Odoo Community accounting — UK VAT-ready
  • A client portal for valuations, invoices and documents

Construction & CIS — £189/month, all-in.

Software, hosting, hourly off-site backups, UK accounting and support — included. Sites and valuations, the CIS engine with labour-only deductions and statutory statements, CIS300 and verification wired to HMRC's Transaction Engine (sandbox-ready; live filing on your own Gateway credentials), the VAT domestic reverse charge applied on the right invoices, snagging tied to retention release and a RIDDOR-aware site diary. Fourteen days free, no card. You'll be running a compliant payment run the same week.

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Direct: [email protected] · Navigare Space Ltd · 73 Lent Green Lane, Burnham SL1 7AS · Company No. 11380511