Supermarkets win £500m business rates appeal

The court of appeal has ruled that cash machines located both inside and outside stores should not be assessed for additional business rates on top of normal rates

The successful appeal means that businesses may be refunded £496m in rates applied to cash machines and reduce some of the pressure caused to businesses. Up to 50,000 other appeals concerned with the application of business rates to external cash machines will now have to be reassessed.

The appeal was fought against the Valuation Office Agency (VOA), the government body that assesses business rates. In the original judgment on the case of Sainsbury’s, Tesco, Co-op and others v Sykes and other valuation officers [2017] UKUT 0138 (LC), the Upper Tribunal ruled that there was a distinction between cash machines inside a building and those outside. External machines were judged to be under the de facto control of the relevant bank and therefore a rateable occupier. This judgment followed a 2014 VOA amendment to rating lists which included supermarket cash machines as separate rate-paying units known as hereditaments. Premises assessed as two hereditaments usually attract higher business rates, and the effect of the decision was to increase the total rates bill for each store.

The change to rates was estimated to amount to within the region of £500m, with each cash machine site attracting a liability of approximately £4,000. The appeal was led by Sainsbury’s, which currently possesses 1,274 retail and 253 non-retail properties, with a total rates liability for 2018/9 of £480m. The largest liability falls to Tesco, which with nearly 3,000 properties pays £660m a year.

‘This is overall a great result’, said John Webber, head of business rates at Colliers International. ‘We are delighted the Courts saw sense. The one fly in the ointment would be if the Supreme Court allowed the VOA to appeal further. 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.’

Report by James Bunney

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