From March 2025, traffic management companies working on construction projects have officially been brought under the Construction Industry Scheme (CIS).
This update by HMRC recognises some traffic management operations as part of construction work that includes road closures, diversions, on-site safety and preparatory works.
This is a fundamental shift for traffic-management businesses. The change introduces new compliance responsibilities and stricter reporting requirements, bringing greater accountability across the sector.
Understanding the Construction Industry Scheme (CIS)
The Construction Industry Scheme (CIS) regulates how payments are made to subcontractors working in the construction industry. Under the scheme, contractors must register with HMRC, verify subcontractors before making payments, deduct tax at source, and submit monthly CIS300 returns and remit taxes to HMRC by strict deadlines.
Before the changes introduced in March 2025, traffic management companies operated outside these regulations, which sometimes led to unequal tax treatment and the misclassification of workers. The update closes that gap, bringing traffic management in line with other core construction activities and ensuring greater consistency across the sector.
Traffic-Management Operations Included Within the Scope CIS
According to HMRC’s internal manual CISR14305, traffic management services required to enable road works and other construction operations to be completed safely are now classed as preparatory or integral operations under the Construction Industry Scheme (CIS).
Examples of traffic-management operations now covered by CIS include:
- Traffic management services supplied to contractors for roadworks or other construction projects (e.g. setting up safe traffic flows)
- Work done in advance of construction—such as tree or vegetation removal, enabling works, or temporary road repairs ahead of more permanent works.
- Installation or provision of temporary traffic lights or signage when used for construction work (where the service is more than just supply).
- Use of barriers, cones, and pedestrian diversions as part of site traffic management for construction projects
- On-site traffic control or traffic monitoring directly linked to construction or infrastructure operations.
Source: HMRC CISR14305 Manual
Operations Explicitly Excluded (Remain Outside CIS)
HMRC also lists some traffic management work that remains out of the scope of CIS:
- The supply and delivery only of traffic-management equipment (for example, delivering cones or signs to a drop-off point without placing or installing them).
- Traffic management for non-construction purposes, such as events, parades, or festivals.
Source: GOV.UK – CIS Guidance
VAT Domestic Reverse Charge
From 1 March 2025, traffic management services within the Construction Industry Scheme (CIS) will also be subject to the Domestic Reverse Charge rules for VAT.
This means that when one VAT-registered contractor supplies services to another, no VAT is charged on the invoice. Instead, the customer accounts for the VAT on their VAT return.
However, when the service is supplied to an end user (like a developer, local authority, or business using the service themselves), the reverse charge does not apply. In that case, normal VAT rules apply, and VAT must be charged on the invoice to the end user.
Source: GOV.UK – VAT Domestic Reverse Charge for Building and Construction Services
Compliance and Potential Risk
CIS compliance is not a simple responsibility. Returns must be submitted monthly, records must be maintained accurately, and tax deductions must be applied correctly. Any errors can lead to penalties, lost contracts, or reputational damage.
Compliance responsibilities go beyond payment deductions and tax reporting. You are required to perform right-to-work checks, identity checks, IR35 status determination checks and meet data protection (GDPR) obligations. When subcontractor arrangements are not carefully examined, there’s a serious risk of misclassifying a worker as self-employed.
How The Infinity Group Can Help
The Infinity Group takes the administrative burden off your shoulders by managing the entire CIS process. We take care of everything from start to finish, ensuring complete accuracy and compliance.
CIS Payroll Management
- Calculating and applying deductions accurately.
- Paying subcontractors on time.
- Preparing and submitting CIS300 monthly returns and tax remittances to HMRC before the deadline.
- Issuing CIS statements to subcontractors.
Compliance Checks
- Right-to-work and ID verification for all subcontractors.
- IR35 and Supervision, Direction and Control (SDC) reviews to confirm self-employment status under HMRC definitions.
- GDPR-compliant data handling to ensure all records are secure and compliant with UK data standards.
Subcontractor Support
- Assistance with subcontractor registration under CIS.
- Handling subcontractors enquiries effectively
Secure Online Portal
Our online portal provides complete visibility over payments, deductions, invoices and statements — helping contractors and subcontractors access all data easily, anytime.
All data is processed in line with GDPR regulations, ensuring security, transparency, and reliability.
With The Infinity Group, you can save time, minimise compliance risk, and focus on your core operations while we manage your CIS responsibilities accurately and efficiently.
To find out more about our services, get in touch with our CIS team today.
Conclusion: Adapting to the New Rules
The inclusion of traffic management companies within CIS has changed the compliance requirements across the industry. Contractors must now ensure all processes are carried out in line with HMRC standards, as all the rules are already in effect.
Infinity Group provides the guidance and support needed to manage this transition. We handle the complexity, reduce risk and give you peace of mind that your business is fully compliant.
Contact our CIS experts today to ensure you are meeting every requirement under the new rules.
Frequently Asked Questions (FAQs)
Should traffic management companies be registered for CIS?
Yes. Traffic management providers delivering services related to construction must be registered under the Construction Industry Scheme since March 2025.
What happens if I do not adhere to CIS rules?
Failure to comply may result in penalties from HMRC, loss of contracts and reputational damage.
What is the procedure for verifying subcontractors under CIS?
Before making any payments, subcontractors must be verified with HMRC to determine the correct tax deduction rate. We carry out this verification directly with HMRC and apply the appropriate rate of 20%, 30%, or 0% (gross payment status). This ensures all payments are fully compliant with CIS regulations.