Councils face an estimated combined bill of up to £500m to refund supermarkets after the Court of Appeal ruled that cash machines should not be assessed separately for business rates.
Retailers Tesco, Sainsbury’s and The Cooperative Group, along with ATM operator Cardtronics Europe have won their challenge to a 2010 decision by the Valuation Office Agency to create separate entries for the sites of supermarket cash machines.
Property consultancy firm Altus estimates that the backdated bill which businesses will be due via rebates at £382m, while property consultancy Colliers put the figure at £496m.
Robert Hayton, Head of U.K. business rates at Altus Group, said: “This landmark ruling and the tax rebates that will flow from it will have massive implications for councils and their budgets under business rate retention which could potentially impact upon local services.”
Jerry Schurder, head of business rates at Gerald Eve, said: “Due to the VOA decision, councils didn’t have any choice in the matter.
“Arguably they have had a windfall as a consequence. However, they were fully aware of the challenge and presumably prudent councils will have made some sort of provision against the risk of having to pay refunds that will be due.”
Schurder said that there were around 50,000 appeals which could now be granted as a result of the Appeal Court decision.
The judge in the case found that a decision in 2016 by the Upper Tribunal (Lands Chamber) had erred by not overturning the original 2010 decision.
He said: “I cannot see how it could have concluded, on the evidence before it, that in the case of any of these ATM sites, internal or external, the bank was in rateable occupation of the site as paramount occupier.”
The judgement said that the creation of business rates for cash machine sites had not been accompanied by a reduction in the rateable value of the supermarkets hosting them.
The VOA has 28 days to petition the Supreme Court to review the decision, and a statement from the office said: “We are considering the implications of the Court of Appeal decisions.”
John Webber, head of business Rates at Colliers International, said that supermarkets would have removed many of their bank machines from their premises had the VOA won the case.
He said: “We hope no further taxpayers’ money is wasted in pursuing this unnecessary and unfair claim.
“There was a real fear that if the VOA had been successful this would have opened up the floodgates to assess up to 400,000 vending operations which would have been calamitous for both retailers and those operators.
“Hopefully, this puts the VOA zealots back in the box and they get on with dealing with the outstanding appeals instead of cooking the golden goose named ‘retail’.”
