Outstanding business rates refunds of over £300m from both the 2010 and 2017 list have dried up for the big supermarket chains pending the outcome of the decision over whether ATMs located within shop premises be assessed for separate business rates, according to Colliers International, the global property consultancy business. The case, which is proceeding to the Court of Appeal at the end of May is likely, whatever the outcome, to be challenged and taken to the Supreme Court next year, adding to further delays in working out what supermarkets should be paying and what they should be refunded. This comes at a critical time in terms of cash flow for many supermarket chains.
In the case, the Valuation Office Agency (VOA) is claiming that ATMs located both outside and within a retailer’ premises should be assessed separately for additional business rates and that retailers should pay the business rates taxes on them, in addition to their normal store rates costs. Colliers has estimated this could cost store operators dear since each ATM site would attract an average rates liability of £4000, providing yet another financial burden on today’s strapped retailers.
Even more pressing in today’s difficult market, is that the delay in resolving this issue has clogged up the appeals system with tens of millions of pounds worth of possible refunds for the supermarket chains still waiting to be dealt with, but unable to be enacted until a final decision on this case is made.
According to John Webber, Head of Business Rates at Colliers International, “The big four supermarket chains (Tesco, Sainsburys, Asda and Morrisons) pay enormous rates bill – this year over £1.77 billion between them alone. And given the pressures on the sector with rising food prices and wage bills and for many a footplate of stores too big for their current needs, it is not surprising we are seeing some consolidation in the sector as the proposed Sainsbury/Asda merger shows.”
“Business rate bills are of course just one extra pressure- but a very significant pressure if supermarket chains are not only paying big rates bills but are unable to claim the refunds they are due and now very much need. Our clients are asking us to help them save money on their business rate taxes, but it looks like it will be 18 months, at least before the ATM issue is solved. In that time who knows what further difficulties the sector will experience. “
