Closing a final account: the evidence, the deductions that appear at the end of every job, and the order to negotiate in

Published 7 September 2026 · VariationFlow

The final account in construction, explained for UK subcontractors: what it is under JCT and NEC4, what has to be in it before it goes in, the deductions that turn up at final account and the answer to each, how the Construction Act still governs the final payment, the order to negotiate in, what full and final settlement actually settles, how long you have, and the records that decide it.

A curtain-walling subcontractor finishes a job in March and submits a final account of £412,000 in April. In June the main contractor’s quantity surveyor sends back a spreadsheet headed “final account assessment” at £338,000. The difference is £21,000 for scaffold “retained beyond your period”, £14,000 for “attendances”, £9,000 for “making good to others’ work” and a £30,000 line called “commercial adjustment”. The £20,600 retention is “to follow on the client’s certificate”. There is no pay-less notice, no breakdown of the attendances, and no date on which anything will be paid. The subcontractor has done nothing wrong, and is about to lose £74,000 to a spreadsheet, because the spreadsheet is the only document on the table. Everything below is about making sure it is not.

What is a final account in construction?

The final account is the closing statement of everything owed under a construction contract once the work is complete: the contract sum, adjusted for every variation, remeasurement, daywork, fluctuation, loss and expense claim and contra-charge, less retention still held and everything already paid, leaving one figure that one party owes the other. It is a contractual process, not a statutory one. The Housing Grants, Construction and Regeneration Act 1996 never uses the phrase, but it treats the final payment exactly like every other payment under the contract: it must have a due date and a final date for payment, it must be the subject of a payment notice, and if the payer intends to pay less than the notified sum it must serve a pay-less notice in time. That is the single most useful thing to know about final accounts, because most of the money lost at this stage is lost by treating the final payment as a negotiation with no rules, when it is a payment with all of them.

How does the final account work under JCT and NEC4?

Under the JCT main contract forms the contractor sends the documents needed to adjust the contract sum within six months of practical completion, the quantity surveyor prepares the statement of adjustments within three months of receiving them, and the Final Certificate is issued within two months of the latest of the end of the Rectification Period, the Certificate of Making Good and the sending of that statement. Clause 1.9 of the Standard Building Contract then gives the Final Certificate conclusive effect: on the adjustments to the contract sum, on extensions of time and on loss and expense, unless proceedings are begun within 28 days of it. The JCT sub-contract forms mirror this with a Final Sub-Contract Sum and a final payment, and they carry a conclusive-evidence provision of their own with its own window. Read yours for the number of days, because once it has passed the figure is the figure.

NEC4 has no final account as such. On the Engineering and Construction Subcontract, clause 53 has the Contractor assess the final amount due and certify a final payment after the Defects Certificate; if the Contractor does not, you may issue your own assessment. Either assessment becomes conclusive evidence of the final amount due unless it is disputed through the subcontract’s procedure inside the short window clause 53 sets. The main contract runs the same mechanism one level up, with the Project Manager assessing, but its periods are not yours: read your own clause 53 for them. The lesson is the same as JCT’s: silence past the window is agreement.

Where a subcontract has no adequate mechanism of its own, the Scheme for Construction Contracts fills the gap. Paragraph 5 makes the final payment due on the later of 30 days after completion of the work and the making of a claim by the payee; paragraph 8 sets the final date for payment 17 days after that; paragraph 10 requires any pay-less notice at least seven days before the final date. A subcontract that says the final account will be “agreed” and paid “when the main contract final account is settled” has no adequate mechanism, and the Scheme’s dates apply whether or not anyone has read them.

What has to be in the final account before it goes in?

A final account is a payment application with a longer memory. Submit it as one, dated, headed as an application, and reconciled to the last certified figure, so that the payment notice and pay-less notice clocks run from the day it lands. Before it goes in, it needs:

• The ledger. The contract sum or agreed price, then every adjustment in the order the contract lists them, each cross-referenced to the document that authorises it. A final account that opens with a total and works backwards is read as a negotiating position. One that opens with the contract sum and adds is read as an account.
• The variation register, in four columns. Instructed in writing and valued or agreed; instructed in writing and not yet agreed, with your valuation and its basis; done on the strength of a verbal instruction or a drawing change with no written instruction, with the evidence that the work was done and who asked for it; and omissions, with the value taken out. The third column is where the money is lost on most jobs, and the verbal instructions guide sets out what it takes to recover it.
• The remeasure, where the contract is remeasurable, with the drawings it was taken from and the date of each. A remeasure the other side cannot check is a remeasure they will not accept.
• Dayworks, each sheet signed on the day by someone with authority to sign it. Unsigned daywork sheets are evidence of time spent; signed ones are evidence of an agreed record of it, and the difference is usually the whole argument.
• Loss and expense or prolongation, only where the notices the contract required were given at the time. Most subcontract forms make the notice a condition of the entitlement, and a prolongation claim first mentioned at final account is a claim with no notice behind it.
• The retention account: what was deducted, what has been released, what the contract says triggers the balance, and the date that trigger occurred or should have. The retention guide sets out why a release keyed to the main contract certificate is not a lawful trigger.
• The contra-charges you accept, stated and deducted by you. Conceding the genuine ones in your own account removes them from the argument and makes the ones you reject look like what they are.
• Payments received, reconciled to the certificates and notices they were paid against, and interest on any that were late, calculated to the date of the account.

Which deductions turn up at final account, and what is the answer to each?

The same handful appears on almost every final account, because they work often enough to be worth trying. Each has an answer, and the answer is rarely “no” on its own; it is “show me the basis”, which section 111(4) of the Act entitles you to demand in writing.

• “We will agree it when the client agrees it.” Section 113 makes a term that conditions payment on the payer being paid ineffective unless the payer’s own payer is insolvent, and section 110(1A) does the same for a term that conditions payment on the performance of another contract or on someone’s decision about it. Neither the main contract final account nor the employer’s certificate is a lawful reason to withhold yours.
• Attendances, scaffold, skips, cleaning, welfare. Contra-charges are set-off, and set-off against a notified sum needs a pay-less notice that states the sum and the basis on which it is calculated. A round figure with a label is not a basis. Ask for the dates, the rates and the documents, and ask whether the subcontract actually allocates that cost to you; many say the main contractor provides attendances free.
• Liquidated damages passed down. These need three things: a subcontract that provides for them, a delay that is yours after any extension of time you were entitled to, and a pay-less notice in time. A deduction for delay on a job where your extension of time was never dealt with is a deduction for a delay nobody has established.
• Defects and “making good to others’ work”. Almost every subcontract gives you the right to remedy your own defects first, and the cost of others doing it is recoverable only after you were notified and failed to. A deduction for making good that you were never asked to do is not a defects deduction; it is a variation the other way round.
• Work omitted and given to someone else. An omission removes the work from the contract; it does not license the contractor to have it done by another firm at a lower rate and charge you the difference. Check the value taken out is the contract value of the work and no more, and where the omitted work was then given to another firm, ask in writing why, because most standard forms do not permit an omission for that purpose.
• Retention held past its release. Half is released at practical completion under most forms and the balance at the end of the defects period, and a subcontract that keys either release to a main contract certificate is caught by section 110(1A). Retention that has fallen due is part of the notified sum like everything else.
• The “commercial adjustment”. A round number with no head of claim behind it is not a deduction the Act recognises. It is an invitation to negotiate a discount for prompt payment, and it should be treated as one: a decision for you, in exchange for something, never a line to be accepted because it is on the spreadsheet.
• Set-off from another job. A loss on a different project can be deducted only where the subcontract expressly permits cross-contract set-off, and then only through a pay-less notice that says so. Silence on the point means it cannot.

Does the Construction Act still apply at final account?

In full, and it is the reason the spreadsheet in the opening paragraph is not the end of the story. The final account is an application; the contractor must give a payment notice stating the sum it considers due and the basis of the calculation, and if it does not, your application stands as the notice under section 110B. Whatever that notified sum is, the contractor must pay it by the final date for payment unless it serves a pay-less notice in time stating the lower sum and its basis. An “assessment” that arrives with no date, no notice and no basis is none of those things, and if the final date passes with nothing served the notified sum is due in full. The smash-and-grab guide sets out how that is enforced. The contractor can then have the true value decided afterwards, as the Court of Appeal confirmed in S&T (UK) Ltd v Grove Developments Ltd [2018] EWCA Civ 2448, but only after it has paid. Pay now, argue later applies to the last payment as much as to the first, and the right to suspend for non-payment under section 112 does not lapse because the work is finished; it simply has less to bite on.

In what order should you negotiate it?

Most final accounts are settled by negotiation, and the order matters more than the tone. The sequence below is designed so that at every step you are either being paid or building the record for the step after.

• Reconcile before you submit. Your own last application, the last certificate, the payments received and the variation register must agree with each other before the other side sees any of them. An account that contradicts your own earlier applications hands the contractor its first argument for free.
• Submit it as a formal application with the evidence indexed, and put the three dates in the diary the day it goes: the payment notice date, the pay-less date and the final date for payment. From here the contract is running the clocks, not the correspondence.
• At the first meeting, separate the agreed from the disputed and get the agreed figure in writing. Then ask for it to be certified and paid now. Nothing in the standard forms requires the undisputed part of a final account to wait for the disputed part, and a contractor who refuses to pay what it accepts it owes has told you how the rest of the negotiation will go.
• Take each disputed head on its own evidence. Demand the basis of every contra-charge in writing, answer each with the document that answers it, and concede the ones you cannot answer. A contractor that has been given the basis for rejecting six of its eight deductions tends to drop the seventh.
• Make without-prejudice offers in writing, on the disputed heads only, with a date by which they lapse. An open-ended offer becomes the new floor of the negotiation. One with a date is a decision the other side has to make.
• Escalate one dispute at a time. Where the notices were not served, refer the notified sum to adjudication and let the value argument follow. Where the argument is about the value of the variations, refer that as one dispute, framed tightly, with the evidence pack as the referral. The adjudication guide sets out what that costs and how long it takes; the threat is credible only if you are visibly ready to do it.
• Close with a signed settlement document that says what it settles, and nothing until then. A figure agreed by phone, or in the corridor after a meeting, is a figure the other side can remember differently.

What does “full and final settlement” actually settle?

Whatever the document says it does, and only that, so read it for four things. Does it release the retention, or is retention outside it and due on its own trigger? Does it release your defects liability, or does that survive, as it normally should and normally does? Does it release the contractor’s claims against you, delay damages included, or only yours against it? And does it fix a date for payment and what happens if that date is missed, because a settlement that is not paid is a new debt with a new clock. Two traps are worth naming. A remittance marked “in full and final settlement of all claims” does not become a settlement because the money is banked, but reply in writing on the day rejecting the condition, or you will spend money arguing that it was not one. And under Rock Advertising Ltd v MWB Business Exchange Centres Ltd [2018] UKSC 24 a clause requiring variations to be in writing means what it says, so a deal struck orally at a meeting does not vary a contract that carries one. Write it, sign it, and have the other side sign it, in that order.

How long do you have?

Two clocks, and they run at different speeds. The contractual one is short: 28 days to challenge a JCT Final Certificate under clause 1.9 of the main contract, the window clause 53 of your NEC4 subcontract sets to dispute a final assessment, and whatever a JCT sub-contract says about its own final payment, which can be shorter than the main contract’s 28 days. Miss it and the figure becomes conclusive on the matters the clause lists, whatever the evidence says. The statutory one is long: a claim for money due under a contract can be brought within six years of the date it fell due under section 5 of the Limitation Act 1980, twelve where the contract was executed as a deed under section 8. A final account that was never agreed is a claim, not a lost cause, for as long as that period runs. Interest runs from the final date for payment at the contract rate where the contract provides a substantial remedy for late payment, and otherwise under the Late Payment of Commercial Debts (Interest) Act 1998 at eight per cent over the Bank of England base rate fixed at the reference date, with fixed compensation per debt of £40, £70 or £100 depending on its size. Interest is claimable on a final account like any other debt, and putting the calculation in the account is a quiet reminder that the delay has a price.

The records that decide it

A final account is won on the record made while the job was running, not on the argument made after it. Six things settle almost every dispute in it:

• The instruction trail: every written instruction, drawing revision and site instruction, dated, with the variation it gave rise to.
• The variation register itself, kept from the first week, with each item’s instruction, evidence, valuation and the date it was submitted, so the account is a print of the register rather than a reconstruction.
• Daywork sheets signed on the day, and the photographs and diary entries behind the ones that were not.
• The application and notice sequence for every payment cycle, with the dates each was sent and received, because the Act’s remedies at final account turn entirely on who served what and when.
• The correspondence on every contra-charge: the demand for its basis, the reply, and the documents that answered it.
• The settlement document, signed by both sides, saying what it settles.

VariationFlow keeps that record as the job runs, so the final account is assembled from it rather than reconstructed for it: every variation with its instruction, photographs and status, every application and notice with its dates and the clocks that follow from them, the retention account, and the interest and letter-before-action engine for the sums that fall due and are not paid. This guide is general information about final accounts under UK construction contracts, not legal advice; your subcontract’s own final payment and conclusive-evidence terms govern, and an account of any size is worth an hour with a quantity surveyor or construction lawyer before it is signed off.