VAT treatment of storage facilities
Produced in partnership with Martin Scammell
VAT treatment of storage facilities

The following Tax guidance note Produced in partnership with Martin Scammell provides comprehensive and up to date legal information covering:

  • VAT treatment of storage facilities
  • Why does this matter?
  • What do landlords need to do?
  • Why was the measure introduced?
  • What are the EU vires for the measure?
  • What is taxable under these provisions?
  • Outright disposals
  • Headleases
  • Ancillary use
  • Animals
  • more

This Practice Note is about the VAT treatment of storage facilities.

Why does this matter?

The provision of storage facilities became generally subject to VAT from 1 October 2012, but most businesses affected by the change did not realise this, because HMRC and the government long persisted in describing the measure as about ‘self-storage’.

Since, in HMRC’s view, taxation applies by reference to the actual use of premises, not their intended use, landlords need to monitor their tenant’s activities and/or to insert additional clauses in leases and licences so that they know where taxation applies.

What do landlords need to do?

Landlords need take no action if a letting is taxable anyway, for example because of an option to tax. In other cases, where they are treating lettings as exempt, they need to check whether the tenant’s use of the premises triggers a VAT liability and, since the position might change during the term of the lease, to do so periodically. In most cases the lease will allow them to add VAT to the rent, but this will not always be the case.

HMRC says that:

‘A supply of storage may occur regardless of the physical use of a facility if it is implicit in the nature of the premises or commercial documentation that the facility is intended for use as storage