If you’re running a construction firm, cash flow is your fuel.
Projects move quickly, money goes out faster, and retentions take forever to come back.
The real squeeze, though, doesn’t always come from clients or suppliers.
It comes from CIS deductions.
Before your business even sees the money, 20% is taken straight off the top.
And right now, HMRC are taking up between six to nine months to pay back CIS refunds.
That’s nine months waiting for your own money.
Cash that could be keeping your projects moving, paying your trades faster, or letting you invest in better kit.
Instead, it sits in HMRC’s account, earning you nothing, while you’re trying to make payroll and keep projects on track.
How CIS Strangles Growth
The Construction Industry Scheme was designed to deal with non-compliance in the sector.
It works fine for stopping cowboy operators, but for legitimate, VAT-registered contractors, it often ends up creating more pain than protection.
Here’s why.
CIS deductions distort your real cash position.
You might look profitable on paper, but the bank balance doesn’t match. You’ve technically earned the money, but you don’t have it to spend.
Refunds take months.
By the time HMRC returns your cash, the jobs that created those deductions are long finished, and the next round of projects has already started eating into your working capital.
You can’t plan around uncertainty.
When refund timelines vary between six months and nine, there’s no way to forecast with confidence.
If you’re trying to grow, that kind of unpredictability is more than frustrating. It’s dangerous.
Because when your cash is tied up, every other part of the business starts to feel the squeeze.
How CIS Pressure Spreads Through the Business
The impact of CIS isn’t just something that shows up in your accounts. It ripples across every part of your operation.
Projects slow down.
When cash is locked up, you delay ordering materials, hold back on bringing in extra trades, or juggle wage payments. It creates friction that eats away at profit.
Subcontractors lose trust.
Paying subbies late or changing terms to manage cash flow quickly damages relationships. Word spreads fast in this industry, and reputation is everything.
Finance costs creep in.
Many firms plug the gap with overdrafts or invoice finance. It works in the short term, but the interest and fees quietly erode margin.
Compliance risk goes up.
When cash is tight, it’s easy to miss PAYE or VAT deadlines. That’s all it takes for HMRC to flag you as high risk, which can then affect your Gross Payment Status.
At that point, it’s not just a cash flow problem anymore.
It’s a control problem.
What Smart Contractors Do Differently
The best-run construction businesses don’t treat CIS as an afterthought.
They build it into their systems, forecasts, and compliance routines so it never gets the upper hand.
Here’s what that looks like in practice.
1. Go Gross
If your business is compliant, profitable, and well-managed, apply for Gross Payment Status (GPS).
That means you’re paid in full, without deductions, and you can manage your own tax.
You keep the cash in your business until it’s time to pay HMRC, giving you full control of your working capital.
It’s one of the cleanest ways to stop CIS from throttling your cash flow.
If you do this, set one rule: treat that money as tax, not profit.
That discipline is what separates firms that survive from those that struggle.
2. Protect Your Status
Getting Gross Payment Status is one thing. Keeping it is another.
It’s reviewed every year, and HMRC can withdraw it for something as small as a late VAT return or PAYE payment.
So if you go gross, protect it like your livelihood depends on it – because it does.
Have tight internal systems, a reliable bookkeeper or finance partner, and a clear monthly checklist to ensure every filing, payment, and return is on time.
Gross status isn’t a once-and-done win. It’s a responsibility.
3. Build CIS Into Your Forecasts
Even if you’re still on deduction status, build CIS into your cash flow forecast.
You should know exactly:
When you see it clearly, you can plan around it.
A good cash flow forecast doesn’t just track what’s in the bank. It shows what’s owed to you, what’s delayed by HMRC, and what that means for upcoming projects.
That visibility lets you make decisions from data, not guesswork.
4. Stay on Top of Your CIS Reporting
You can’t make HMRC move faster, but you can stop delays on your end.
For limited companies, CIS refunds go through your payroll system.
Each month, your accountant should send HMRC the right reports showing what tax you owe and what CIS has already been deducted.
HMRC then knocks the CIS off your PAYE bill.
If you’ve had more tax taken than you owe, you can claim the difference back – but only if your reports are up to date.
Keep your payroll and CIS submissions accurate and on time, and you’ll get your money back sooner instead of waiting months.
5. Work With Accountants Who Understand Construction
CIS isn’t just a tax process. It’s a working capital issue.
A generalist accountant will record your CIS transactions. A construction accountant will use that data to spot cash flow patterns, identify where your projects are tying up money, and build forecasts that actually help you run the business.
When your accountant understands how the numbers connect to the ground reality – supplier terms, retention timelines, labour flow – that’s when you start to gain real control.
At your scale, it’s not about “doing the books”. It’s about having the financial rhythm to grow without running out of cash.
The Bottom Line
Right now, too many good contractors are giving HMRC an interest-free loan for half the year.
That’s not a refund. That’s your own money stuck in someone else’s account.
Your cash should be funding your next job, not sitting in the tax system.
The smartest firms don’t just accept CIS deductions as part of the game. They manage them, plan around them, and make sure every penny they earn works for them, not against them.
Go gross where you can.
Stay compliant so you keep that status.
And always know exactly how CIS affects your cash position before it hits your account.
Because when you take control of your CIS, you take control of your cash flow.
And when you take control of your cash flow, everything else in your business gets easier – faster decisions, stronger supplier relationships, less stress, and real freedom to grow.
Go gross.
Save your own tax.
Keep your cash moving.
That’s how smart contractors stay in control.
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