Farmers, are you aware that you have to charge VAT for storage space?
It is not uncommon for farmers to rent out unused buildings for storage. However, beware!! It is not generally known that the introduction of VAT on self-storage in October 2012 also affects you!
As the legislation referred to self-storage, it was not fully understood what impact it would have on other trade sectors. Although the legislation was termed self-storage, HMRC defined the granting of facilities to a person, for the storage by them of goods, or a storage facility which is empty, as standard rated – facilities being a unit, container or building.
In August 2013, HMRC issued a VAT information sheet (10/13) (Click here to view) which cancels the sheet on self-storage and is now named “Provision of Storage Facilities”. This notice clarifies that there is no difference between “storage” and the term “self-storage”. Therefore, if, for example, you rent your barn to a neighbouring farmer to store his machinery over the winter, you must charge 20% VAT! It is no longer an exempt supply.
It will also be necessary, if you have not properly accounted for VAT, to rectify this going back to October 2012.
The standard rating does not apply to the storage of live animals or for bare land used for storage purposes.
Should you wish for VAT-related advice specific to your business, please contact us.
Please note: This article is a commentary on general principles and should not be interpreted as advice for your specific situation.
