Supermarket chains including Tesco and Sainsbury’s have won a legal battle over how cash machines in their stores are rated – with more than £300m in rates refunds said to ride on the result.
Court of Appeal Judge Mr Justice Lindblom, giving judgement today, said that the court had found in favour of the supermarkets, and rejected a cross-appeal from the Valuation Office Agency (VOA).
The case concerned whether automated teller machines (ATMs) located within shop premises should be assessed for separate business rates.
The VOA had argued that “external facing” cash machines in stores should be treated differently from internal ATMs – a ruling which affects the treatment of many thousands of ATMs built into supermarket walls across the country by making them liable for separate business rates.
At a hearing earlier this year, the supermarkets claimed that the ATM sites are under the control of the much larger supermarket sites, and seek to claim back rates that they say they paid unfairly.
Bryan Johnston, a real estate litigant partner at Dentons, said it is a “decisive and pragmatic judgment in favour of retailers seeking to avoid ATM sites being treated at separate property units for business rates purposes”.
Johnston represented Sainsbury’s and Co-op in the case.
“The decision ensures that the VOA cannot create fiscal alchemy by separately rating portfolios of ATM machines within host properties,” he said.
“Business rates are under intense scrutiny and the property occupation-based system is putting ratepayers under intense pressure as retail habits change and ratepayers feel the financial pinch. This decision is at least some resistance against the wave of rating pressure.”
According to consultants Colliers International, outstanding business rates refunds of more than £300m from both the 2010 and 2017 lists could be due, pending the outcome of today’s ruling.
Colliers estimates that each ATM site would attract an average rates liability of £4,000.
The dispute arose out of action taken in 2014 by the VOA 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 Co-op, as well as in convenience stores and other locations where ATMs are operated by Cardtronics.
Jerry Schurder, head of business rates at property consultants Gerald Eve, who represented Cardtronics in the matter, said: “This four-year battle has resulted in a victory for common sense and we welcome the court’s decision that ATMs shouldn’t attract separate rates bills.”
“We especially welcome the court’s rejection of the VOA’s attempt to separately rate internal machines, the consequences of which would have been dire,” he said.
“The VOA readily admitted in the Court of Appeal that, if successful, its approach would have led to the likes of kiddie rides, coffee and soft drink machines each receiving their own rates bills. The VOA must now drop its crusade to seek out more things to assess for business rates.”
At the hearing today, Lindblom LJ said that the court has refused the VOA permission to appeal to the Supreme Court, but they can petition the court directly to take the case on if they wish.
Court of Appeal
(Gloster LJ, Lindblom LJ, King LJ)
9 November 2018
