This article is from the source 'guardian' and was first published or seen on . It last changed over 40 days ago and won't be checked again for changes.

You can find the current article at its original source at http://www.guardian.co.uk/business/marketforceslive/2012/mar/22/budget-big-yellow-safestore-vat

The article has changed 2 times. There is an RSS feed of changes available.

Version 0 Version 1
Budget 2012: Self storage groups Big Yellow and Safestore to challenge VAT move Budget 2012: Self storage groups Big Yellow and Safestore to challenge VAT move
(40 minutes later)
Anyone putting their excess possessions into self storage units may have to pay VAT for the privilege from October, under measures announced in the budget, potentially adding up to 20% to their bills.Anyone putting their excess possessions into self storage units may have to pay VAT for the privilege from October, under measures announced in the budget, potentially adding up to 20% to their bills.
Up until now self storage units have been treated in the same way as the rental of commercial property, and thus exempt from VAT. The government now wants to bring it in line with other forms of storage. But the industry was not informed about the plan beforehand, and both major listed companies, Big Yellow and Safestore, have said they and their advisors will be discussing the issue with the tax authorities.Up until now self storage units have been treated in the same way as the rental of commercial property, and thus exempt from VAT. The government now wants to bring it in line with other forms of storage. But the industry was not informed about the plan beforehand, and both major listed companies, Big Yellow and Safestore, have said they and their advisors will be discussing the issue with the tax authorities.
Analyst Alan Carter at Safestore's broker Investec said any tax would have a neutral effect on the government's finances since companies would be able to claim back the VAT they incurred:Analyst Alan Carter at Safestore's broker Investec said any tax would have a neutral effect on the government's finances since companies would be able to claim back the VAT they incurred:
The lack of detail is telling. There are repercussions if self storage is to be classified as something other than commercial property space, and this is not scoped out in the Budget. In this case the decision demonstrates a potential lack of forethought of the further consequences of the change, leaving the self storage industry well placed in our view to mount a successful defence against the change. The tax change is part of a wider push to reduce property taxation and VAT anomalies.
The lack of detail is telling. There are repercussions if self storage is to be classified as something other than commercial property space, and this is not scoped out in the Budget. In this case the decision demonstrates a potential lack of forethought of the further consequences of the change, leaving the self storage industry well placed in our view to mount a successful defence against the change. The tax change is part of a wider push to reduce property taxation and VAT anomalies.
Big Yellow, 10.1p lower at 299.9p, said if it passed half the charge on to its customers and absorbed the rest, the overall effect would be neutral to the company because it would also be able to reclaim VAT on its costs. It would also expect to talk to Customs and Revenue about the reimbursement of VAT it had already paid on capital expenditure, if the change went ahead.Big Yellow, 10.1p lower at 299.9p, said if it passed half the charge on to its customers and absorbed the rest, the overall effect would be neutral to the company because it would also be able to reclaim VAT on its costs. It would also expect to talk to Customs and Revenue about the reimbursement of VAT it had already paid on capital expenditure, if the change went ahead.
Meanwhile Safestore, down 2p at 116p, said the move would have no effect on its Parisian business, which accounts for 25% of revenues.Meanwhile Safestore, down 2p at 116p, said the move would have no effect on its Parisian business, which accounts for 25% of revenues.
And both said there would be less impact on its business customers - who account for 50% of Safestore's let space and 30% at Big Yellow - since they too could simply reclaim the VAT.And both said there would be less impact on its business customers - who account for 50% of Safestore's let space and 30% at Big Yellow - since they too could simply reclaim the VAT.
Meanwhile Lok'n'Store, down 2p at 105.5p, said it had always charged VAT on its storage services and therefore the proposed change would have no impact on its business or customers. Analyst Paul Jones at its broker Panmure Gordon said:
The result [of this proposed change] is a 20% increase in competitor prices (good for Lok'n'Store, albeit its prices are generally already lower), a hit to competitor margins, or a combination of the two. Either way, we suspect Lok'nStore is a clear beneficiary of this change and we reiterate our buy recommendation.