Before 1st October 2012 many smaller self storage operators were unable to reclaim input tax incurred on capital costs. They were unable to do this because their self storage fees were exempt from VAT and the relevant input tax exceeded the partial exemption ‘de minimis’ limits’.
The Finance Act 2013 introduced a relief enabling these businesses to recover over time some of this blocked input tax. The reclaim is dependent upon electing to apply the Capital Goods Scheme (‘CGS’) to the capital expenditure/input tax concerned and making the necessary adjustments. For further details see VAT Information Sheet 14/12 (Self storage).
In many case the first CGS adjustment creating a VAT refund is not yet due. However, elections to apply the CGS must not be delayed until adjustments are due. The election must be made before 31 March 2013 (VAT Regulations 1995 (SI 1995/2518, reg 113A(1)).