CPA Bulletin

40 CPA Bulletin > May 2024 www.cpa.uk.net Q&As: 1 q&a s Where there can be some confusion is if the hire is for a fixed period, i.e., a specific start and end date, then the contract begins and ends on that day; when compared with an indeterminate hire, which has a specific start date, but no end date. Once it has been off-hired for an indeterminate hire, then the customer is responsible for the machine (as well as any other equipment supplied) for the next seven working days, as per clause 24(a) of the Model Conditions. Responsibility under a fixed hire would end when the contract ended. With this hire, the hire was agreed to be for one day, and so the machine and equipment should have been collected on the same day it was delivered, or with agreement of the customer, possibly the next day. The fact that the collection was a week later, would in this case mean that the customer is not liable for the missing equipment - unless it can be shown that it went missing during that one day’s hire. If it can be shown that the equipment was lost during that day, then the customer is charged under clause 13(b) at the two-third’s rate until settlement has been agreed. I hope that clarifies the position. We supplied amachine for a one day hire to a customer under the Model Conditions. We tried to collect it a week later and found that some equipment we supplied with themachine is nowmissing. Our customer is disputing the charges for the lost item, as they believe they are not responsible due to the length of hire, and the timeframe in our collection. Can you please can you advise? For many years whenever we have been unfortunate to have an item of plant stolen whilst on hire to a customer, we have always invoiced the customer with zero VAT, as that is what we advised to do at the time. Can you advise whether this is still correct? Previously, HMRC had a policy where VAT was not charged to the customer for the repairs or replacement of damaged or stolen items of plant. However, that has changed in the last two years, where HMRC has updated their guidance on VAT supply and Consideration which can be accessed from https://www.gov.uk/hmrc-internal-manuals/vat-supply- and-consideration/vatsc05910 . In short, if the original supply of the plant was subject to VAT, then any charges relating to repairs/replacement, would also be subject to VAT. I hope that answers your question, but should you wish to discuss this further, then please get in touch. We have a dispute with a customer on the interpretation of clause 29 of the CPA’s Model Conditions. We had hired an excavator to a customer, and due to site conditions, the bucket teeth have worn out within eight weeks and require replacing. The customer is challenging the charges and are refusing to pay/accept the charge for replacement parts. Can you confirm who the Hirer is within clause 29, as this would answer who is liable for these costs. Within clause 1 - Definitions - of the CPA’s 2021 Model Conditions, it clearly states within clauses 1(c) and 1(f) who the Hirer (the customer) is, and who the Owner is. Within clause 29, it states that if the bucket teeth have to be re-sharpened or replaced at the end of the hire, then that cost has to be paid by the Hirer (the customer), and not the Owner. I hope this answers your question. I am trying to explain to one of my customers the importance of themhaving ‘hired-in plant’ insurance cover, as they are confused why it is required. Can you provide some guidance which would help both themand us. When a customer hires a machine from a CPA member, then the machine (and operator if applicable) will be supplied under the CPA’s Model Conditions - which is used for business-to-business agreements. Within those terms - specifically clause 13 - Hirer’s Responsibilities for Loss and Damage - it states that the customer will be liable for all loss and damage to the machine during the hire period. If damage does occur, and the customer is held responsible/liable then those damages/losses, then these would be covered under the customer’s ‘hired-in plant’ insurance policy. Just to be clear, the customer does not need to have that policy in place; but most plant owners are unlikely to supply to a customer who does not have this policy in place. If the plant owner does supply to a customer without the policy in place, and something happens to the machine, for which they are liable for, then the customer must pay for the repairs/replacement from their own funds. I hope this helps clarify the position. Whilst every care has been taken to ensure the accuracy of the answers given within this section of the CPA Bulletin, no liability for any damage, liability, cost, loss and/or expense which the reader has incurred can be accepted by the Construction Plant-hire Association (CPA). The reader should obtain independent legal advice on any issue reported within the CPA Bulletin, before proceeding with a course of action.