Cash machines in firing line after business rates’ challenge fails

By Adam Brooke, Rating Director

Free ‘hole in the wall” cash machines attached to corner shops and petrol stations could become a thing of the past in England and Wales following a recent Upper Tribunal ruling.

The argument over business rate liability on ATMs goes back several years when the Government in 2013 decided that a cash machine built into the front of a shop should have a separate, extra rates bill. Bills were sent to thousands of retailers, backdated to the start of the last tax regime in April 2010.

The Government’s decision was challenged by businesses and made its way to the Upper Tribunal (Lands Chamber) in the Sainsbury’s & Others v Sykes (VO) & Others case. The ruling for this came in just before the Easter break but has been somewhat buried in other national and international news.

The Upper Tribunal delivered this significant judgement decreeing that ATMs should be shown separately in the rating list and subject to a business rates’ liability. The issue raised rested on whether land on which ATMs are sited in shops, petrol stations and supermarkets etc. should be shown separately in the rating list and separate from the assessment of the host property.

Whilst the ruling has significant implications for roughly 70,000 ATM sites across the UK and their operators, it will also affect how the Valuation Office Agency considers occupations of other property located within other host sites.

The ruling stated that the non-rateable ATM itself was indicative of the actual occupation and its extent. Where alterations had been made to accommodate the ATM – such as a ‘hole in the wall’ – those alterations indicated the extent of the property to be assessed and the permanence required for an entry in the rating list.

The only site not to be separately assessed was a free-standing machine located within a shop to which only the shops customers had access. Those ATMs accessed by the public externally to the host property were all found to be separate assessments. The distinction is important. Those ATMs facing internally to customers of the host store were held to be in the paramount control of the host (no separate assessment) rather than in the control of the ATM operator (requiring a separate assessment).

Therefore, the configuration and location of the machines provides a route to avoid assessment giving hope to those rural locations requiring the service and to occupiers located in host property. But expect an appeal to the Court of Appeal with reference to Westminster Council v Southern Railway Co. Ltd [1936].

The full decision can be found here. Sainsburys Others V Sykes (VO) Others RA 29 39 2016