Invoice for building work: stages, variations, retention

A construction job is not a series of small invoices. It is one running account, and each document you send is a claim on it — work done to date, less what has already been billed, less whatever the contract lets the payer hold back.

Get that shape right at the first application and the final account writes itself.

Two dates decide everything, and both are in the contract

Find the payment due date and the final date for payment before raising anything. Where the contract is silent the Scheme fills the gaps: payment falls due seven days after completion of the work it relates to, or the making of your claim, whichever is later; the final date is 17 days after that; a payment notice is due within five days of the due date; and a pay less notice must be served not later than seven days before the final date for payment.

That last one is the money: a pay less notice served on the day payment was due is late, and a late one is no notice at all. The full sequence is in payment notices and pay less notices.

Check one thing first: work on a dwelling the other party occupies falls outside the Act — for a householder there are no statutory notices, no adjudication and no right to suspend.

Make the application do the work of a notice

Serve the interim application as a payee's notice: the sum you consider due, and the basis on which it is calculated. That basis is measured quantity — metres run, square metres laid, units fixed — shown as the measurement it came from, not rounded into a lump. If the payer gives no notice of its own, your figure becomes the notified sum, and the notified sum is what must be paid.

Variations get their own line, priced the week they happen

A variation folded into an existing line disappears. Give it its own line, its own reference, and the rate it was agreed at: an agreed lump, a measured rate from the original pricing document, or day work at the sheet rate with the signed sheet number on it.

Day work priced in month five for work done in month two is the most expensive habit in small construction firms.

Retention comes off after the VAT, never before

Retention is a payment condition, not a reduction in price: the customer owes the whole amount and may pay part of it later. So the invoice shows the work in full, VAT is calculated on the full net value, and the retained percentage is deducted below the gross to give the amount now payable.

Cutting the net by five per cent and charging VAT on the remaining 95 understates the tax — on a document that, once issued, can only be cancelled and reissued, never corrected. And on work for a VAT-registered contractor inside the CIS chain there may be no VAT on the invoice at all: when your invoice must not show VAT.

The final account: offset every stage exactly once

The final invoice states the whole job and deducts each interim invoice already raised. Miss one and a stage is billed twice; deduct a payment never invoiced and you have given work away.

Two rates are worth re-checking before the last document goes out: a new dwelling is zero-rated for the work and the materials built into it, while qualifying conversions sit at five per cent — one house can carry both. And where a contractor pays you, the CIS deduction still comes off the labour element of every stage — which is why the split matters on an interim application too: 20 per cent, 30 per cent or nothing at all.

The weekly habit around the small jobs is in invoicing for tradesmen. For a running job file, see Zirko for builders.

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What Zirko does here: a measurement chain such as 100+(5.14)/2 stays in the line item and is recalculated on the server when it saves; interim invoices are offset in the final invoice automatically; and retention is applied below the gross, so it never touches the VAT.*