Supermarket chains including Tesco, Sainsbury’s and Co-op today started a Court of Appeal battle over how cash machines in their stores should be rated – with more than £300m in potential refunds said to ride on the result.
The supermarkets say that their business rates have been unfairly inflated by a decision made by government agency the Valuations Office to charge separate business rates for cash machines, or ATMs, on their sites.
The key question is whether ATM sites are under the control of their host supermarkets or whether they are so-called ‘hereditaments’ and thus liable for separate business rates.
Opening the hearing today, Sainsbury’s barrister Richard Drabble QC said this it was their “basic proposition” that the store “had sufficient control of the ATM site” so that no separate hereditament could be “carved out”.
He said that it was “common ground” that the court should not look at the value of the ATM itself. “We are looking at who is the occupier,” he said.
Court papers lodged by Tesco provide an example of the amount of business rates supermarkets are paying, and the increase caused by separately rating ATM sites.
In 2010, a Tesco store in Nottingham was given a rateable value of £1,840,000, according to Tesco’s skeleton argument. In 2014 a valuations officer deleted this entry and replaced it with one entry of £1,840,000 for the store site, and another of £11,250 for the ATM site.
Real estate services company Colliers International estimates Tesco’s annual business rates liability for 2017/2018 at more than £640m; Sainsbury’s at more than £470m; Asda’s at more than £400m; and Morrisons’ at more than £260m.
The case is scheduled to be heard for two days but, whatever the outcome, it is likely to end up being taken to the Supreme Court.
This could further delay any refunds, at what is seen as a critical time for cash flow for many supermarkets.
Sainsbury’s Supermarket and others v Sykes (valuation officer) and others
Court of Appeal (Gloster LJ, Lindblom LJ, King LJ) Court of Appeal 23-24 May 2018
