At a time of increasing strain for landlords and their commercial tenants due to the effects of COVID-19 and the lockdown, there is some welcome news regarding business rates in the retail sector. Almost a year to the day since it granted permission to appeal, the Supreme Court has handed down judgment in the important case of Cardtronics UK Ltd v Sykes concerning the treatment of ATMs for rating purposes.
The Supreme Court has upheld the Court of Appeal’s 2018 decision that ATMs are not to be assessed for rating purposes separately to the retail premises in which they are situated.
This will deprive the local authority of revenue of around £500 million which will no doubt have to be refunded to the ATM owners in due course and, from their point of view, could not come at a worse time as they face the additional costs arising in connection with the ongoing lockdown.
On the other hand, the decision is very good news for the retailers, such as supermarkets, convenience stores and petrol stations, who operate ATMs (often through associated companies), as well as the consumers who use them.
It is also good news for landlords of retail premises, whose tenants’ businesses and solvency will be assisted by the reduction in rates' liability.
Retailers and landlords will be relieved that this issue has finally be put to bed. When retailers do start paying rates next year, they will receive a discount for what many see as a vital service for their customers. Any long-term cost savings for the ailing UK high street is cause for celebration.
At the heart of the submissions for the retailers, as I understand them, is the relationship between the service provided by the ATMs and the general retail business of the store. From their point of view, the ATM service is not a distinct business activity, but an integral part of the business activity of the store. It is, they say, one of the typical services provided at a modern retail store, and so regarded by their users.