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HMRC internal manual

VAT Land and Property

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HM Revenue & Customs
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Provision of storage facilities (Item 1ka): VAT liability of supplies of storage - new rules introduced

Before 1 October 2012, the provision of a clearly defined space used for storage of goods and which met the conditions of a licence to occupy land was exempt from VAT. But an owner of such a space could choose to ‘opt to tax’ their land, in which case the supply of a licence to occupy land became taxable at the standard rate of VAT. However, storage suppliers such as traditional removal companies who provide no discrete area and are at liberty to move goods around have always had to charge VAT on their supplies of storage.

It was clear that previous legislation had created an anomaly in the VAT treatment of storage between different storage providers. Therefore, the change introduced by the Finance Act 2012, required the standard rate of VAT to be applied to supplies of storage facilities with effect from 1 October 2012 and it is based on a more general use of the space for storage.

This is intended to create a level playing field by ensuring that the provision of facilities for the storage of goods is taxed consistently and to address avoidance within the storage sector.