Overview
The Supreme Court has unanimously dismissed the appeal by the UK Government over the charging of business rates in respect of supermarket cash machines in England and Wales. This concludes a long battle for retailers which started in 2013 when the decision was taken to charge separate business rates on the sites of ATMs.
The Supreme Court's decision on 20th May confirms that ATMs should not be separately assessed for business rates in England and Wales, regardless of whether the ATMs are situated inside or outside of a retail store.
The Supreme Court found that in each case both the retailer and the bank/ATM provider derived a direct benefit from the use of the sites and that they shared the 'economic fruits'.
Background
The appeal concerned the treatment for rating purposes of ATMs located in supermarkets or shops owned and operated by retailers.
Four categories of ATM were considered:
- External ATM – located on external store wall; accessible 24hrs; connected to store electricity supply; cash owned by the bank but ATM machinery (and cash) kept in the cash room of the stores;
- Internal ATM – available for use in-store; accessed during store hours;
- Convenience store ATM – similar to external ATM but due to reduced floor space of smaller stores, maintenance/loading of the ATMs lead to greater interference with the stores' workings; and
- Moveable ATM – machinery can be unbolted from floor and moved.
HMRC valuation officers challenged the Court of Appeal ruling which had concluded that cash machines at existing properties (of all four categories) should not be subject to separate business rates bills. The Court of Appeal had overturned the earlier Upper Tribunal decision.
Impact of the Decision
Appeals relating to some 10,000 other sites (amounting to 34,000 appeals) had been stayed pending the Supreme Court's decision.
An estimated £430m falls due to be repaid to retailers by local authorities for rates already paid in relation to ATMs. The positive financial impact will be significant, particularly in the current economic climate.
Retailers who chose to remove ATM facilities from their sites to guard against additional business rates being charged in respect of the facility may now consider reinstating ATMs to boost their business offering and provide vital consumer banking facilities.
The case is also a reminder that a person in possession of property giving another person a right to use part of that property must be aware that, if that use is not exclusive, they will retain liability for business rates for the property.
Should you require further information in relation to the implications of this decision for your business or if you require advice in relation to obtaining a refund of business rates please contact one the DWF Tax Team or your usual DWF contact.
Authors: Caroline Colliston and Freya Gibb
