VAT - Self Storage
Up until 1 October 2012, the provision of a clearly defined space (technically known as a 'licence to occupy land') for the self storage of goods was exempt for VAT purposes. Self storage, as the name suggests, is the letting of space to a third party for that third party to store their own goods e.g. caravans, materials, tools, equipment etc. Prior to 1 October 2012, the supply was treated in the same way as rent and only if an option to tax had been made, was VAT due. More information about option to tax can be found in Notice 742A Opting to Tax Land and Buildings.
With effect from 1 October 2012, the rules have changed. The new rules are based on use of space for the self storage of goods. The changes ensure that the provision of space used for the self storage of goods (by the customer of the provider of the self storage space) in structures such as containers, units or buildings is standard rated.
Applying these new rules to the Agricultural sector in particular, this now means the letting out of a farm building to a third party for that third party to store their own goods changes from an exempt supply to a standard rated supply. Therefore, since 1 October either 20% needs to be added to the charge or the charge is now deemed to be inclusive of VAT which would mean the farmer has to stand the cost of the VAT and effectively be out of pocket by the change. It is worth pointing out that if a farmer is storing livestock for a third party then there remains no VAT.
For further information regarding this change, specifically in relation to supplies which straddle 1 October 2012 and where space is used for self storage and another purpose please see HM Revenue and Customs VAT Information sheet 14/12.
For further information regarding the above please do not hesitate to contact Alan Taylor at the office.
Author: Alan Taylor FCCA
A former pupil at Ripley St Thomas C of E High School in Lancaster, Alan joined Scott & Wilkinson directly from school in 1994 and qualified as an Accountant in 2001. Alan is the Partner with responsibility for the day-to-day...
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