Every Successful Trade Business Starts Somewhere
At Hammond & Co, we work with plumbing and heating engineers at every stage of their journey, from established firms with multiple vans on the road to individuals taking their very first step into self-employment.
Some clients come to us with systems already in place. Others arrive with little more than a van, a set of tools, and the ambition to build something of their own.
This is the story of one of those beginnings.
We will call him Tom — a qualified plumber who decided it was time to create his own business.
The Starting Point – A Van, Determination, and a Lot of Questions
When Tom first came to see us, he had recently left employment with a local heating contractor. He had a van, a small but loyal customer base, and a growing list of quotes he was keen to convert into work.
What he did not have was clarity on how to structure and manage the business properly.
Like many new tradespeople, he had questions we hear every week:
- Should I operate as a sole trader or a limited company?
- How does CIS work in practice?
- What happens if I start working for larger contractors?
- How do VAT and payroll fit in as I grow?
Tom was not looking for theory or jargon. He wanted practical advice from people who understood how his trade actually works. That is exactly what we provided.
Step One – Building the Right Foundations
Before discussing figures, we focused on direction.
We asked Tom what he wanted the business to look like in the short and medium term. His goals were clear:
- Focus on boiler installations and maintenance contracts
- Grow to two engineers and an apprentice within three years
- Build a reputation for reliability and quality
With those objectives in mind, we set up the business properly from day one:
- Registered the company correctly with Companies House and HMRC
- Set up CIS both as a subcontractor and, later, as a contractor
- Registered for VAT at the right time to allow recovery of VAT on tools and his van
- Implemented Xero, Dext and SmartVault so records flowed seamlessly and remained compliant
By getting the foundations right early, Tom was able to focus on winning work rather than worrying about paperwork.
Step Two – Understanding CIS and Protecting Cash Flow
Tom’s first contracts involved subcontracting under the Construction Industry Scheme. Each payment arrived with 20 percent deducted at source, which caused understandable concern.
We explained that these deductions were not lost money but advance payments towards his tax liability.
By helping Tom track CIS statements accurately and keeping his records clean, we ensured his first tax return was submitted correctly and on time.
The result was a CIS refund of more than £3,000. That cash injection funded new signage, a professional website, and additional tools to support future growth.
As Tom later told us, that moment marked a turning point. The business finally had room to invest rather than simply survive.
Step Three – VAT and the Domestic Reverse Charge
As the business grew, Tom began working for larger contractors, bringing the Domestic Reverse Charge VAT rules into play.
He had heard stories of tradespeople charging VAT incorrectly or paying HMRC twice due to errors.
We configured his accounting system so the correct VAT treatment applied automatically. Invoices were clearly worded, VAT returns were monitored, and Tom was trained to identify when the reverse charge applied.
The result was simple, stress-free compliance with no penalties and no surprises.
Step Four – Growing the Team with Confidence
Around eighteen months in, demand outstripped capacity. Tom wanted to recruit an apprentice and an experienced engineer but was cautious about taking on fixed wage costs.
We supported him by:
- Setting up payroll with accurate PAYE and pension calculations
- Explaining his responsibilities as an employer
- Producing a cashflow forecast to ensure wages were affordable even in quieter periods
We also identified available apprenticeship funding, which significantly reduced the cost of taking on new talent.
With the right advice and planning, Tom was able to grow the team without putting the business at risk.
Step Five – Month-9 Tax Planning
As part of our proactive service, Tom was enrolled into our Month-9 Tax Planning Programme.
Nine months into the year, we forecasted profits, Corporation Tax, and personal tax exposure. This allowed Tom to:
- Make pension contributions to reduce Corporation Tax
- Replace his van and claim capital allowances efficiently
- Set aside an exact monthly provision for tax
When the year-end arrived, there were no unexpected bills — only clarity and control.
Step Six – From Working in the Business to Running the Business
Two years on, Tom was no longer simply a plumber with a van. He was the director of a growing heating business with a clear strategy and a reliable team.
We worked together to:
- Create a three-year business plan with achievable growth targets
- Analyse job profitability using management reports
- Identify which services delivered the strongest margins
- Introduce quarterly management accounts to support informed decision-making
This shift in visibility changed how Tom viewed the business. Decisions were now based on data, not instinct.
The Result – A Strong, Compliant, Well-Run Business
Today, Tom’s business:
- Employs three engineers and an apprentice
- Operates multiple vans across the region
- Submits VAT, CIS and payroll returns accurately and on time
- Maintains steady cashflow with no debt
- Has full visibility over tax liabilities throughout the year
Most importantly, Tom now has time away from the business, confident that the numbers are under control.
What This Story Demonstrates
Tom’s journey is not unusual. We work with skilled tradespeople every week who are excellent at their craft but frustrated by the financial side of running a business.
The key lessons are consistent:
- Set the business up correctly from the start
- Track CIS deductions carefully
- Apply VAT rules accurately
- Plan ahead for tax and cashflow
- Invest in specialist support early
Why Plumbing and Heating Businesses Choose Hammond & Co
We understand the realities of the trade: early starts, unpredictable workloads, and constant problem-solving.
Our clients value:
- Clear advice without jargon
- Expertise in CIS, VAT and payroll
- Systems set up around how trades actually work
- Proactive tax planning, not retrospective reporting
- A responsive, approachable team
We believe good accounting is about more than compliance. It is about giving you confidence, control and clarity.
Thinking About Starting or Growing Your Plumbing Business?
Whether you are just starting out or ready to take the next step, Hammond & Co can help you:
- Choose the right business structure
- Register correctly for CIS, VAT and payroll
- Implement systems that save time
- Plan ahead for tax and cashflow
- Build a sustainable, profitable business
Let’s Build Your Success Story
If you are a plumbing or heating engineer looking for an accountant who understands your industry and your ambitions, we would be pleased to speak with you.