Relief for retailers in ATM business rates decision

External facing supermarket cash machines are not to be separately assessed for business rates, the Court of Appeal has ruled today in Cardtronics Europe Ltd (and others) v Sykes and others [2018] EWCA Civ 2472.

The Court had to decide the correct legal approach to the rating of external ATMs in supermarkets, shops and petrol filling stations. In such cases, the ATM operator is different to the occupier of the shop premises in which it is situated. Valuation officers had argued that these ATMs were separate units of assessment (known as "hereditaments") for business rates purposes. On the other hand, the supermarkets claimed the ATM sites should be assessed together with the shop premises as a whole.

Importantly, in most cases where valuation officers had imposed separate assessment, no reduction in the rates assessment of the main shop premises has been made. This meant that separate assessment would lead to significantly increased total rates bills. Valuers estimate the typical rateable value of each ATM site to be around £4,000, which would have created a significant burden for retailers and/or the banks operating the sites.

Legal issues

Business rates are a tax on individual hereditaments or units of property, not on businesses. Where a hereditament is wholly or partly occupied, rates are payable by the party who is in rateable occupation. However, the concept of rateable occupation is not straightforward where there are two or more parties exercising some degree of control over the premises in question.

In such cases, it is necessary to look at which occupation is the "paramount" one. Where the owner of the wider premises (here, the supermarkets) retains "general control" over the disputed unit (the ATM sites), the owner's occupation will be the paramount one and there will be no separate assessment.

This had been the finding of the only previously reported case on ratings assessment of ATMs in England, Stringer (V.O.) v J. Sainsbury Plc [1992] R.A.16. That case placed emphasis on the nature of the relationship between the bank and the retailer, being a form of joint venture which enhanced the "retail offer" of the premises by adding to the range of services available to consumers. The bank relied on the cooperation of the supermarket in operating the ATM, the supermarket's occupation remained paramount and there was no separate hereditament. However, previous ratings cases in Scotland had been decided differently.

Decision and reasoning

In finding that separate assessment of the ATM site was not warranted, the Court relied on several findings of fact which indicated the retailers retained general control over the units:

  • The ATMs enhanced the store’s “retail offer” by adding to the range of services available at the store.
  • Some of the stores had been designed or adapted to accommodate an ATM.
  • Access to the ATM for regular servicing, maintenance and loading could only be achieved from within the store, and with the retailer’s co-operation or consent.
  • The retailer’s employees were often involved in servicing, maintaining and/or loading of the ATMs.

Implications of the decision

Today's ruling will be a welcome relief – not just for retailers, but for any business with an externally facing ATM on their premises. A contrary ruling would have risked exerting further pressure on the viability of the high street and resulted in a reduction in the number of ATMs for consumers. In that sense, the judgment can be seen as good news for retailers, ATM operators and consumers alike.

It will be interesting to see whether the decision is appealed to the Supreme Court, which has already given a number of ratings judgments in recent times. This includes the decision earlier this year (on which TLT acted) that frozen food specialist Iceland's air handling system, which is used in connection with its refrigeration units, should be regarded as plant and machinery used in connection with a "trade process" and not therefore rateable, suggesting that there is a theme emerging of the courts finding in the rate payer's favour in these kinds of cases.

The decision also comes hot on the heels of last week's budget, in which the chancellor offered retailers a one-third reduction in rates bills where the rateable value does not exceed £51,000.

TLT has extensive ratings expertise. Please get in touch to find out how we can help you.

Contributor: Matt Battensby

This publication is intended for general guidance and represents our understanding of the relevant law and practice as at November 2018. Specific advice should be sought for specific cases. For more information see our terms & conditions

Date published

09 November 2018



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