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HMRC internal manual

Construction Industry Scheme Reform Manual

HM Revenue & Customs
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The Scheme: construction operations: plant hire

CISR14600 Action guide contents

FA04/S74 (2)(f) states that ‘operations which form an integral part of, or are preparatory to, or are for rendering complete’ other construction operations are within the scope of the Construction Industry Scheme.

The use of plant such as scaffolding, cranes, cement mixers, concrete pumps, earth moving equipment and compressors is an integral part of any substantial construction project. Where the contractor hires the plant used from another person they must consider whether CIS applies to the payments. The following rules apply:

  • Payments for the hire of plant without an operator are outside the scope of CIS.
  • Payments for the hire of plant with an operator are subject to CIS.

Note: Where a subcontractor has to hire plant in order to carry out construction work, the cost of the plant hire and any consumable items such as fuel needed for its operation, may be treated as materials for the purposes of calculating any deduction on account of tax.

This treatment only extends to plant and equipment actually hired by the subcontractor from a third party. If the subcontractor owns the plant employed in executing the work no ‘notional’ deduction for plant hire may be made although consumable items such as fuel may still be treated as ‘materials’.

Some subcontractors have said that as they have bought the equipment or plant used, under a ‘hire purchase’ agreement, then they should be entitled to make deductions for plant. However, the fact that they have used hire purchase to obtain plant for the particular job does not entitle them to a deduction as materials for the payments.

For more information about the treatment of plant hire payments as ‘materials’ where a deduction needs to be made, see CISR15090.

Tugs, barges, and other vessels

When used in the course of constructing docks, marinas and offshore installations these are viewed as construction plant. If, as is generally the case, the vessel is provided with a crew that carries out operations, this represents the hire of plant with operator and is subject to CIS. If, however, the vessel is merely hired, with the contractor providing their own crew, this represents ‘plant hire’ and is not subject to CIS.