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HMRC internal manual

VAT Land and Property

HM Revenue & Customs
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Provision of storage facilities (Item 1ka): what suppliers need to be aware of

It is the responsibility of the supplier to ensure that the correct VAT treatment is applied according to the actual use of the space. If you lease or let any space which could be used for storage and you have not opted to tax it, you will need to establish if your customer is using it for storage or permitting a third party to use it for storage and ensure that you charge VAT accordingly. In most cases, the use of the space will be clear from the nature of the facilities and the agreements you have entered into with your customer. However, in some instances, facilities may be suitable for a variety of uses. In such cases, suppliers are advised to obtain confirmation in writing from the customer of how the customer is using the space and to retain it with their VAT records.

In addition to periodic reviews, businesses letting out property and space may wish to insert clauses in leases specifying that the customer must tell them if they either start or stop using the facilities for storage, or permit a third party to do so and include provisions as to the VAT consequences.