U.K. Self-Storage Operator Big Yellow Considers Legal Action Against Proposed Sales Tax
|Copyright 2014 by Virgo Publishing.|
|Posted on: 07/10/2012|
U.K. self-storage operator Big Yellow Group PLC has explored taking legal action against a proposed sales tax that would be imposed this fall on self-storage customers. Any appeal against the tax, however, would not take place until after Oct. 1, when the value-added tax (VAT) is set to be introduced.
"There may be grounds to challenge the decision, and we are currently considering our legal options," company officials said in a statement.
British Finance Minister George Osborne proposed in March to eliminate the United Kingdom’s self-storage market exemption from charging customers sales tax. The move could mean thinner profit margins for U.K. self-storage operators and higher prices for rental customers. Currently, self-storage unit rentals are treated the same as renting commercial property.
Big Yellow and Safestore Holdings PLC, two of Britain’s largest self-storage operators, both have spoken publicly against the VAT, warning that it could hurt the U.K.’s entire self-storage market. Big Yellow has said the impact of the tax would be absorbed largely by its business customers.
The threat of the impending sales tax has not significantly dampened Big Yellow’s quarterly performance numbers. The company reported total store revenue from its wholly owned storage sites grew 10 percent in the first quarter (year over year) to about $26.23 million. The company’s fiscal quarter ended June 30. Although the government’s proposal was made toward the end of the previous quarter, revenue during the first quarter increased 5 percent.
Big Yellow Self Storage has 54 wholly owned and 66 total facilities in the United Kingdom, with most concentrated in Greater London.