There has been a recent change in VAT legislation that means, with effect from 1st Ocober 2012, you must reconsider the VAT treatment of any buildings you let where your tenant rents a container, unit or building for the purpose of storing goods.
Previously, the letting of such units would have been exempt for VAT, unless you had elected to charge VAT on the supply. Now, if you let space for the purpose of storing goods, the supply is standard rated for VAT.
If your agreement with your tenant does not specify the use to which the building will be put, you must obtain confirmation from them, preferably in writing, as to the use to which the space will be put. Where the space is to be used for both the storage of goods and another purpose, the VAT liability will follow that of the principal element of the supply.
It is possible that you might let for a non-storage purpose but that your tenant later changes the use of the space so that it is primarily used for storage. In that event, your income becomes standard rated from the date you become aware or there have been indications of a change.
As you will no doubt expect, if you do not charge VAT when you should do, HMRC will charge the usual penalties and interest. I therefore recommend that rent agreements should include a clause that requires the tenant to notify you of any changes in the use to which the space will be put and indemnify you for any loss if they fail to do so.
This is clearly a complex area and if you would like to discuss it further please do not hesitate to call me.