Despite the Court of Appeal ruling in November that cash machines should not be assessed separately for business rates, Councils across England and Wales have started to send tax demands to retailers for another £46.70 million ahead of the start of the new tax year which starts on 1st April according to real estate adviser, Altus Group.
The Court of Appeal ruled late last year that cash machines within existing properties – whether internal or external facing – should not be subject to separate business rates bills and instead fall within the overall property’s rates liability.
The decision paved the way for hundreds of millions of pounds of backdated refunds for the hard pressed retail sector and confirmation that there would be no future tax demands.
But retailers were dealt a massive blow before Christmas after hopes of an immediate tax stimulus worth £381.99 million to the sector through reimbursing erroneous bills going back to 1st April 2010 were dashed with the Government agency responsible for business rates petitioning the Supreme Court for leave to appeal paving the way for fresh tax demands to be sent out as appeals were stayed.
Robert Hayton, Head of U.K. Business Rates at Altus Group, points the finger squarely at how Councils are funded for the protracted legal dispute saying, “The amount to be rebated back will place a heavy burden upon stretched Council revenues which could risk local services so the status quo is unsurprising.”
Retailers were left reeling after a decision in 2013 to charge separate business rates on ‘hole in the wall’ cashpoints, which are classed as ‘non-rateable machinery’ and had not previously affected the store’s overall rates bill. Extra bills were then sent to thousands of retailers in 2014 backdated to April 2010.
The controversial change was triggered by an increasing reliance on property taxes by Councils in England who since 2012 have been able to keep 50% of any net increase in business rates as an incentive to support job creation.
This “localism” inspired cash strapped councils to identify additional rateable properties at the same time that the Valuation Office and grocers were in dispute over how cash machines should be assessed.
The number of cash machines being liable for business rates tax in England and Wales then surged from 3,140 in 2010 and now stands at 15,784 on 1st January 2019 according to Altus Group.
Hayton says,“If permission is granted for the Supreme Court to hear the case, realistically, the tax position could be tied up in costly litigation for upto 2 years denying the high street a much needed stimulus. It could also lead to retailers actually withdrawing facilities impeding access to cash as they seek to reduce their rates liabilities.”
In 2018, 757 bank branches closed leading to a heavy consumer dependency on ATM usage at local shops, supermarkets and petrol stations.
Hayton added, “The Government really needs to step in through a policy decision and fund centrally these rebates. Cash machines drive footfall at a time the high street is struggling against internet shopping. Banks are closing branches and people are now facing an uphill battle to access their cash yet retailers continue to be penalised for picking up the slack and providing a vital service.”
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