Government loses Supreme Court appeal over tax on retailer ATMs

The Government has lost a landmark appeal at the UK’s highest court over the charging of separate business rates on supermarket cash machines.

Valuation officers from HM Revenue & Customs challenged a Court of Appeal ruling which concluded that ATMs at existing properties, either inside or outside, should not be subject to separate bills.

But, in a ruling on Wednesday, a panel of five justices dismissed the Government’s appeal and upheld the Court of Appeal’s decision.

Lawyers for Cardtronics UK Ltd, which operates and manages about 20,000 ATMs in the UK and opposed the Government’s appeal, described the ruling as a “resounding win”.

Emily Wood, partner and head of the real estate dispute resolution team at law firm DMH Stallard, who represented Cardtronics, said: “Retaining the imposition of rates on ATMs would have had huge ramifications not only for the industry, but the provision of available cash to spend locally and where needed.

“More so than ever, in the current climate, the right decision has been upheld by the court.”

The Court of Appeal ruled in November 2018 that cash machines at existing properties, either inside or outside, should not be subject to separate business rates bills, overturning an earlier Upper Tribunal decision.

But retailers were denied a tax stimulus when the Valuation Office Agency, an executive agency of HM Revenue & Customs, decided to take the case to the Supreme Court.

Lord Carnwath, giving the lead ruling of the court, said: “I agree with the Court of Appeal that the Upper Tribunal erred in law by taking an unduly narrow approach.

“The only differences identified by them were the fact that the external ATMs were available to a wider market and at all times, and ‘physically separated’ from the other facilities in the store.

“However these factors did not detract from their finding that the retailer remained in occupation of the ATM site, nor did they suggest that it was any less part of the retailer’s overall business.”

“No-one, I think, would suggest that in that case the external ATM should be treated as a separate hereditament.

“On this issue also I consider that the retailers’ analysis is correct in law and should be supported.”

The Supreme Court decision is the final chapter in a long battle for retailers, following a decision in 2013 to charge separate business rates on “hole-in-the-wall” cashpoints.

Retailers saw their rates bills soar after the changes, with demands backdated to 2010, and started removing ATMs from stores to reduce liabilities.

Robert Hayton, head of UK business rates at real estate adviser Altus Group, said that during 2019 retailers removed 559 cash machines from their stores as they sought to reduce their tax bills while the legal dispute continued.

Mr Hayton said: “Retailers were left reeling after a decision in 2013 to charge separate business rates on ‘hole-in-the-wall’ cashpoints, which had not previously affected a store’s overall rates bill, with extra bills being sent to thousands of retailers in 2014 backdated to April 2010.

“This will now bring closure to a long costly legal dispute which should never have been brought.”

John Webber, head of business rates at real estate firm Colliers International, said: “This is a massive relief, not only for the supermarkets involved, but also for the consumers who need access to these machines.

“Many would have suffered if the judgment went the other way and retailers ripped the ATMs out of their stores, to save extra rates bills, denying many in the local community free access to cash.”