VAT announcement

RNS Number : 8325Z

Big Yellow Group PLC

22 March 2012

 



22 March 2012

Big Yellow Group PLC

("Big Yellow" or "the Company")

VAT and Self Storage

Big Yellow Group PLC announces today that following a proposed change of legislation in yesterday's Budget, the Group would potentially be required to charge VAT to its customers from 1 October 2012.  The rental of self storage units is currently exempt from VAT as a licence to occupy land in the same way as the rental of commercial property. 

HMRC have invited consultation on this proposed change and we, with the help of our tax advisors, intend to actively engage in discussions with them.

In the event that this does however become law, as stated, we will therefore have to charge VAT on our storage income to all of our customers.  We already charge VAT on packing materials, and the sale of contents insurance will remain exempt and subject to IPT.   Currently, we do not recover VAT on our operating costs and these would therefore become recoverable if self storage rents became subject to VAT.  In addition, approximately 30% of our revenue is derived from business customers for whom this change will be neutral, as the vast majority of them are able to recover VAT.

It is our understanding that all of our major competitors would also be affected by this proposed change. 

Our licence agreement allows us to move customers' rents at 28 days' notice.  As an illustration, were we to pass on half of the VAT to our customers and absorb the balance ourselves, this would leave our annualised net operating income on a like for like basis broadly unchanged after taking into account the recovery of VAT on our operating costs.

Over the last ten years we have not been recovering VAT on our capital expenditure given that self storage is exempt.  Any future implementation of this change would require the reimbursement of a significant sum to the Group under the Capital Goods Scheme which would be subject to agreement with HMRC.

For further information, please contact:
Big Yellow Group PLC Nicholas Vetch, Executive Chairman James Gibson, Chief Executive Officer John Trotman, Chief Financial Officer	01276 477811
Weber Shandwick Financial	020 7067 0700
Nick Oborne, John Moriarty

Notes to Editors

Big Yellow Group PLC is the best known and one of the most dynamic self storage groups in the UK.  It was founded in September 1998 by Nicholas Vetch, Philip Burks, and James Gibson and listed on AIM in May 2000, moving to the Official List of the London Stock Exchange in June 2002. 

Big Yellow has expanded rapidly and now operates from 65 stores, 57 in London and the South, two in Sheffield, and one each in Birmingham, Edinburgh, Leeds, Liverpool, Nottingham and Stockport. There are a further five stores in development. Of the 70 total stores and sites, 59 are held freehold and four long leasehold (together representing approximately 94% by value of the total property assets); seven stores are held short leasehold.  All the stores have distinct yellow branding, with the majority being within the M25 or in strong urban conurbations.  When fully built out the portfolio will provide approximately 4.4 million sq ft of flexible storage space. 

The Group has pioneered the development of the latest generation of self storage facilities, which utilise state of the art technology and are located in high profile, accessible, main road locations.  Its focus on the location and visibility of its buildings, coupled with excellent customer service, has created the most recognised brand name in the UK self storage industry.

 

END

 

 

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