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Self-storage or not?

7th Dec 2021
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The First Tier considered an interesting case where investors entered into leases of self-storage units but did not themselves store any goods there. Did that bring those services within the scope of Item 1(ka) to exempt Group 1, and therefore fall outside the exemption?

The company, Harley Scott Commercial Ltd, constructed self-storage facilities divided into separate Store Pods. It had granted 999 years leases to investors, including pension funds, SIPPS and private persons.

It was no dispute that supplies of self-storage to, usually private, customers were excluded from the usual exemption by Item 1(ka); “the grant of facilities for the self-storage of goods.”

There is a helpful comment in para 44 to the decision. Although this was an Opinion by Lord Carloway in Sibcas, it does help to approach such matters clearly:

“In deciding whether a supply is, put shortly, a grant of an interest in land, such as a lease of immoveable property, the whole circumstances of the supply and not just the physical properties of the product, must be looked at in order to understand the substance of the commercial transaction (supply) undertaken.” (italics mine)

The FTT found that the supplies in question were not the provision of self-storage to the investors. The supply to the investors must therefore be exempt, not taxable.

 The decision can be found here: financeandtax.decisions.tribunals.gov.uk/judgmentfiles/j12251/TC08299.pdf 

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