Supermarket chains Tesco, Sainsbury’s and Co-operative are considering whether to appeal further against a ruling that treats “external facing” cash machines in their stores as separate entries in the rating list.
The Upper Tribunal (Lands Chamber) decision will affect the treatment of many thousands of automated teller machines built in to supermarket walls across the country and, because of the considerable importance of the issue, the case is highly likely to go to the Court of Appeal.
The case arose out of action taken in 2014 by the Valuation Office Agency to amend the 2010 rating lists to create separate entries in respect of the sites of ATMs in supermarkets operated by Sainsbury’s, Tesco and the Co-op, as well as in convenience stores and other locations where ATMs are operated by Cardtronics.
Before 2014, the ATM sites in each location had not been distinguished from the host store, and the effect of the decision was to include the ATM site in the list as a separate hereditament with its own rateable value, but without (in most cases) any corresponding reduction in the rateable value of the host store.
In March 2016 the Valuation Tribunal for England dismissed appeals brought by the supermarkets and Cardtronics and determined that the ATM sites concerned were separate hereditaments from the stores, and were in the rateable occupation of the bank or ATM provider, not of the proprietor of the host store. The VTE found that each site should therefore be the subject of a separate entry in the rating list.
Now the UT has ruled that, while freestanding internal ATMs are not separately rateable, external facing ATMs are.
It considered appeals in respect of nine test case sites and upheld the decision in respect of six of them.
Answering the key question, are ATM sites separate hereditaments, deputy chamber president Martin Rodger QC said that a “clear distinction” can be drawn between the space occupied by free standing machines on the one hand and specific sites which have been designed or adapted for the purpose of an ATM on the other.
He said that that distinction is “practical and appropriate to a tax on property”, consistent with the Scottish jurisprudence and provided a clear answer to the key issue for each of the appeal sites.
Emily Wood, partner and head of real estate dispute resolution at DMH Stallard LLP, who acted for Cardtronics, said: “This is clearly a disappointing decision for the ratepayer, particularly at a time when many are facing higher rates bills following the revaluation. The fact that internal or freestanding ATMs will mostly have escaped being separately rateable is of some comfort, but thousands of ATM sites are ‘holes in the wall’ and will be caught.
“In its favour the decision draws clear easily definable lines as to how any given ATM site should be treated, but despite providing such clarity, an application to appeal the decision seems highly likely.”
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