Court Of Appeal To Deliver “Tax On Cash” Judgement On Friday
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 sent to thousands of retailers in 2014, backdated to April 2010 and estimated to be in the region of £200 million over the 7 years of the previous tax regime. Altus Group says the average business rates bill for an ATM is £2,888 this year, but can be as much as £21,600 for a set of cash machines at a Tesco Metro in Liverpool.
The controversial change was triggered by an increasing reliance on property taxes by councils, which collect business rates. Since 2012 councils have been able to keep 50% per cent 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 liable for business rates tax in England and Wales has surged from 3,140 in 2010 to 15,422 this year.
Previous legal rulings have upheld the controversial decision that cash machines built into the front of a shop or petrol station must have a separate business rates bill. So far, the rulings of the lower courts have not affected cashpoints that are inside stores, whether they are free-standing or built in.
This year business rates from separate bills for cash machines will raise £44.54 million in rates tax in England and Wales and £181.27 million over the 4-year life of the 2017 business rates regime.
Robert Hayton, Head of UK Property Tax at Altus Group, said: “As bank closures increase, so too does the reliance on free-to-use ATMs. If the decision is upheld, it is likely small shops will consider whether it is financially viable moving forward to offer free-to-use cash machines that are accessible from the outside of their store. The decision could deprive many communities of vital access to cash given the swathes of bank branch closures.”
Which? say 2,868 bank branches will have closed between 2015 and the end of 2018, with the number having accelerated this year.
Hayton added, “It is essentially the same legal principles that gave rise to the so called staircase tax with the Government changing the law only last week to overcome that unpopular court ruling. The decision as to whether rates are due and payable on cash machines may, ultimately, require legislation once again. The likely alternative is that we pay a fee for our cash or see the machines disappear indoors, where they are inaccessible out of hours.”
Jim McMahon, Labour’s Local Government Spokesman, had urged the Government to intervene, arguing that stores should be supported in stepping up when banks are pulling out of towns.