The VAT liability of self-storage has changed with effect from 1 October 2012.

Under the previous rules, the provision of a clearly defined space for the self-storage of goods was VAT exempt (as a supply of land) unless the self-storage operator had ‘opt to tax’ the land/building.

Providers of other types of storage services (such as traditional removal companies) which do not provide their customers with a discrete area and are able to move their customers’ goods around within their premises, already charged VAT on their supplies.

With effect from 1 October 2012, supplies of self-storage facilities will be standard-rated regardless of whether the supplier has exercised its option to tax.

Crucially, it will be necessary for the supplier to obtain confirmation from his customer of the use to be made of the space.

NHS bodies which supply space to non-NHS customers should therefore review arrangements to determine the use to which the space is being put in order for VAT to be charged where appropriate.

These changes mean that self-storage providers including NHS bodies that have not previously opted to tax may, subject to the normal rules, be able to recover VAT incurred on related costs, including VAT bearing expenditure of £250,000 or more on certain assets such as land and buildings, which fall within the Capital Goods Scheme (CGS).

Finally, NHS bodies are able to recover VAT incurred on traditional storage services under COS heading 63, however where NHS bodies are supplied with space for self-storage, this would not meet the contracting-out criteria as this is simply a taxable supply of land.