VAT Costs For ‘Storage’ Providers

A recent VAT Court decision, in the case of Lok’n’store provides an opportunity to remind people about the relatively recent change in VAT rules concerning leasing land and buildings which the tenant uses for storage, as well as updating you on an interesting point relating to the treatment of VAT on costs of providing such premises.

First, since October 2012 the leasing of property which is used by its tenant for storage purposes is compulsorily standard rated irrespective of whether the landlord has opted to tax the building. There are certain exceptions, in regard to related parties and charities, for instance, but the general position is that, if a tenant uses the premises for storage purposes, VAT applies. It is not necessary for the landlord to provide any additional storage-related services for this to be the case. Nor is it a requirement that the lease limits the use of the premises to a storage-related use, or specifically allows that use to apply.