Typical situations
- CIS deductions, under-deductions or verification issues have created an unexpected tax cash gap.
- VAT reverse charge has changed the timing of tax and receipts on a contract.
- PAYE arrears have built up around site labour, overtime or a mixed PAYE and subcontractor model.
- HMRC is chasing a construction company whose cash is tied up in retentions or unpaid applications.
Why construction HMRC debt looks different
A generic tax-arrears conversation often misses the way construction businesses actually receive money. Payment applications, pay-less notices, retentions and the CIS system all affect when cash arrives and when tax has to be paid.
Reverse charge VAT can also leave a contractor with a timing mismatch: output tax is no longer collected in the same way, but labour, materials and overhead still need to be funded. That is a construction cash issue as much as a tax issue.
CIS, PAYE and the labour model
CIS is not a substitute for thinking about employment status. Where labour has been treated as subcontracted and HMRC later takes a different view, the arrears can be larger than the cash position can absorb.
A credible plan has to cover the current CIS and PAYE position, the risk of further assessments, and whether the labour model itself needs to change. Paying yesterday's arrears while repeating the same structure rarely holds.
Time to Pay still has to be fundable
HMRC may consider Time to Pay where the company is viable and the proposal is evidenced. In construction, that evidence should reflect contract cash, not just a profit and loss account: certified work, retention releases, known disputes and seasonal gaps.
If enforcement is already underway, the conversation sits alongside creditor pressure in construction and the generic HMRC debt options that apply to any UK company. This page is for the construction-specific causes and constraints. The wider tax-enforcement picture is covered on the general HMRC page.
Common questions
Can CIS refunds be used to clear HMRC arrears?
Sometimes CIS over-deduction or repayment timing is part of the picture, but it should not be relied on as a rescue plan. The cash-flow still needs to show how ongoing VAT, PAYE and CIS obligations will be met.
Is this the same advice as your general HMRC debt page?
No. The general page covers VAT, PAYE, corporation tax and Time to Pay for UK companies. This page deals with CIS, reverse charge, construction cash timing and labour-model issues that sit on top of that. We do not publish a separate CIS cash-flow page, because that intent belongs here.
Related services
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Related insights
Options when a company cannot pay HMRC
A practical guide for UK directors when VAT, PAYE or corporation tax cannot be paid on time, including Time to Pay and the limits of informal arrangements.
Construction cash flow, late payment and retentions
How late certificates, pay-less notices and retentions create cash pressure in construction businesses, and what directors should examine first.
