HMRC has released updated guidance about changes to the VAT treatment of self-storage services, which came in to effect last year.

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 ‘opted to tax’ the land/building for VAT. However, from 1 October 2012, supplies of facilities for the self-storage of goods became taxable for VAT, regardless of whether the supplier had exercised an option to tax or not.

In this context, ‘the ‘self storage of goods’ means the storage of goods in a relevant structure (namely the whole or part of any building, unit or container or other structure that is fully enclosed), by the person to whom the supply is made, or a third party with the permission of that person.

HMRC’s updated guidance emphasises that the VAT treatment depends on how the relevant premises are used by the customer. So if, for example, a property is leased to a customer for use as an office, and the landlord has not exercised an option to tax, the rent will be exempt from VAT. If, however, the customer changes its use so that the building is used for storage, the rent will become taxable for VAT at the standard rate.

NHS bodies which lease properties to non-NHS customers should therefore check if these customers (or third parties) are using the properties for storage and charge VAT accordingly. Those NHS bodies which have not correctly accounted for VAT on supplies of storage facilities should now do so, and if necessary, submit a voluntary disclosure of these errors to HMRC.