ATM judgement due out soon: £500million at stake for supermarkets

John Webber, Head of Rating, Colliers International. Copyright Nick Cunard / NCSM Media.

An important judgement concerning business rates and ATM machines is to be made by the Court of Appeal tomorrow (Friday 9 November), and could have a major impact on the viability of ATM machines at supermarkets. The case follows a five year battle between the major supermarkets and the Government’s VOA (Valuation Office Agency) and according to Colliers International, the global real estate advisors, nearly £500 million is at stake for either side.

Currently the VOA is appealing against the ruling of the Upper Tribunal in January 2017 that ruled that the sites of ATMs located within premises should not be assessed for business rates, but those ATM sites outside a shop or store should. The VOA is insisting that the sites of ATMs inside stores should also be separately assessed and retailers should pay the business rates tax on them, in addition to their normal store rates costs. The retailers are hotly contesting this. Colliers estimate that if they fail this could cost store operators dearly, since each ATM site would attract an average rates liability of £4000, providing yet another financial burden on those retailers suffering from higher rate bills following the 2017 Revaluation.

So far, the VOA has assessed 15,500 ATMS externally and are likely to assess a further 10,000 internally should it be successful. Colliers has estimated in this case it would retain as much as £496 m historic liability and may increase its annual liability (business rates take) by £40 million. If the Appellants are successful the refunds will be £496 million.

“This is big money at stake for both sides, “says John Webber, Head of Business Rates at Colliers International. “We hope the Courts see sense. If the VOA gets its way at the Court of Appeal, there is no doubt many big stores would be ripping ATMs out of their stores to avoid the extra business rate tax bill. Ultimately it will be the consumer that suffers. “

On top of this, Colliers has noted that this argument has snarled up the appeals system and have estimated that there are approximately 50,000 cases in the system concerned with ATM business rates.

“Outstanding business rates refunds of over £300m from both the 2010 and 2017 list have dried up for the big supermarket chains pending the outcome of the decision.” says Webber.” This situation is only likely to get worse.”

Colliers believes whichever side wins, the ruling will be challenged and taken to the Supreme Court next year, adding to further delays in working out what supermarkets should be paying and what they should be refunded. This comes at a critical time in terms of cash flow for many supermarket chains, who have already been hit by rising costs in many areas. “This uncertainty about what to do with their ATMS is just another issue the retail market does not need at the moment, “says Webber, “No wonder they feel under siege. Let’s hope the decision this week goes their way…but sadly the wrangle is likely to continue.”