CISR14305 - The scheme: construction operations: Traffic management

This guidance is effective from 1 March 2025 and replaces any previous guidance or rulings. The previous guidance or rulings can, however, be relied upon for transactions prior to that date.

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

The provision aims to cover activities that are routinely undertaken as part of construction operations that are not dealt with specifically under other parts of FA04/S74(2).FA04/S74(2)(f) covers any preparatory operations that enable construction work proper to proceed, operations that are integral to construction and those that render the construction work complete.  

The provision of traffic management services will only be within the scheme if supplied to a contractor carrying out construction operations.  For example, the provision of barriers to the organisers of the Notting Hill Carnival would be outside the scope of the scheme as no construction operations are involved.

Traffic management is required to allow road works and other construction operations to be completed safely. As such, it is both preparatory and integral to the road works/construction operations and therefore, subject to the CIS.  It is similar to scaffolding, that is not a construction operation in its own right but is within scope of the CIS where it is needed for construction operations to take place.

The supply and delivery of traffic management equipment to be used in relation to construction operations at a designated drop off zone (i.e. not placed into position) as an isolated operation will fall outside of the scope of the CIS.  

 As detailed in CISR14260 - The Scheme: construction operations: plant hire - HMRC internal manual  the hire of plant and vehicles with an operator are subject to CIS. 

Other work that is required before the road works/construction operations can commence such as tree/vegetation removal, temporary white lining or temporary road repairs carried out ahead of permanent repairs would be within the scope of the CIS. 

Traffic management business as a contractor

In situations where a traffic management business subcontracts work related to construction operations then, whether it is acting as a mainstream or deemed contractor will depend upon the facts of the case.  Where the traffic management business regularly supplies services connected to construction work then HMRC’s view is that section 59(1)(a) would apply, and it would be obliged to operate the CIS when it pays subcontractors for contracts related to construction operations.  Where, however, the business does not regularly supply these services then section 59(1)(l) would apply, and as a deemed contractor, it would need to apply the CIS from the point where the £3m expenditure threshold is met.

When determining whether the deemed contractor threshold has been met, HMRC’s view is that the contractor should consider expenditure on construction operations in the previous 12 months from 1 March 2025.  The exception to this would be for expenditure related to operations which HMRC’s earlier guidance had explicitly said was out of the scope of the CIS, i.e. temporary traffic lights and the laying of cones. Expenditure relating to these operations should only be included in the calculation from 1 March 2025. 

Transition period - VAT DRC within CIS

VAT is due when a VAT invoice is issued or payment is received, whichever is earlier. For invoices issued for supplies that become liable to the reverse charge from the 1 March 2025, the VAT treatment for invoices with a tax point:

  • before 1 March 2025 ― the normal VAT rules will apply and you should charge VAT at the appropriate rate on your supplies
  • on or after 1 March 2025 — the domestic reverse charge will apply.