CPA Bulletin

Q&As: 1 q & a s We have had equipment on hire to a customer, which was for a fixed period that ended earlier in the year. We have been emailing them to see if they’d like to off hire the equipment or keep it for longer, but we have had no response. We continued with the hire and submitted periodic invoices. We have recently received a response from them, stating that they wouldn’t pay as they hadn’t agreed to an extension to the hire agreement, and would like credit notes for the additional invoices submitted. They have admitted that the equipment, which was hired to themhas been lost, and they will reimburse us for it. Where do we stand? Unfortunately, the original agreement was for a fixed period. So, although you emailed them to see if they wanted to continue the hire, the original agreement had ended earlier in the year, and the equipment should have been picked up then. By not receiving any confirmation or response from the customer, this cannot be interpreted that the contractor would want to continue the hire. You will need to send credit notes to your customer for the additional invoices submitted. Your customer still needs to reimburse you for the loss of the equipment. q A One of our employees has approached us claiming that if the temperature drops too low in the office, he is entitled to go home. Is this correct? The first question that needs clarifying is what temperature does the employee feel is ‘too low’? There is no legislation which stipulates a minimumworkplace temperature an individual must work in. The HSE’s Approved Code of Practice mentions that in an indoor work environment where people sit at desks, then the temperature should be at least 16°C, and a minimum of 13°C where the work is physical, e.g. in a warehouse. However, this is only advice, so as an employer, you’re not obliged to follow it. q A We are a plant owner and we have been approached by one of our customers, who wants to hire one of our machines with operator under the CPA’s Model Conditions. An issue has arisen where the customer has asked us to complete a subcontractor’s form - a Pre-Qualification Questionnaire (PQQ). They have also asked us for copies of our insurance certificates. We are concerned of the possible implications in being treated as a sub-contractor, if we complete the PQQ. Can you provide us with any insight into why they are asking for this information? As you are supplying an operator with the machine, the customer is probably following HMRC’s Construction Industry Scheme (CIS) policy. The policy states that if any personnel are supplied in a construction related activity, then that supplier is treated as a sub-contractor. By falling under the category of sub-contractor, the customer is asking you to complete the PQQ and to provide copies of your insurance certificates. This issue does occasionally arise, so the CPA created a draft letter which clarifies the position of a supplier of machinery and that of a sub- contractor. If you send this letter to your customer, it may help resolve the problem you are experiencing. q A Can you confirm if we can include VAT on the invoice, that we send to our customer for loss or damage to plant and equipment sustained whilst it was out on hire under the CPA conditions? You cannot charge VAT in these circumstances. HMRC’s view is outlined in their document 10.14 - Compensation for damaged goods, which states that the customer should not be charged any VAT for any loss or damage to plant and equipment which had been hired out. This is also confirmed on the Gov UK website at https://www.gov.uk/guidance/vat-lost-stolen- damaged-or-destroyed-goods. q A 40 CPA Bulletin > February 2020 www.cpa.uk.net