Business Rates Refunds for Big 4 Supermarket Chains Grind to a Halt at Critical Time

Outstanding business rates refunds of over £300 million 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 2018 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. “
 

*Sainsburys Supermarket Ltd, Sainsbury’s Bank Plc, Cardtronics Europe Limited, Tesco Stores Ltd, Co-Operative Group Limited v Chris Sykes and Others (Valuation Officers)

**

Supermarket

No. hereditaments/properties

Annual Rates Liability (Bill) 2017/8 (estimated by Colliers)

Tesco

2800

Over £640 million

Sainsburys

1374 retail + 253 non retail

Over £470 million

Asda

642 stores

Over £400 million

Morrisons

498 stores

Over £260 million


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John Webber

Head of Rating

Birmingham

I have over 30 years’ experience in the rating industry and lead a 90 plus rating team at Colliers International.  When I took over responsibility for the team in 2005, it consisted of only a dozen people and has now grown into one of the leading rating advisory teams in the country.  I am a member of Colliers International Management Executive as well as sitting on the company’s promotion panel. 

I am regularly called upon by the national media to give my views on a range of business rates issues and I am vocal commentator on the 2017 Revaluation.

I started my career in the Valuation Office Agency in Kidderminster.  I joined Gerald Eve in 2000 where I spent 10 years before moving to Gooch Webster (now Colliers International). I sit on the National Retail Panel of Rating Surveyors Association which provides guidance on how the RSA town committees work with the VOA and valuation matters.  John sits on the RICS Rating Diploma Committee having passed the prestigious qualification in 2014.

Philip Harrison and I founded 'Accurates' in 2007, the Collier's Compliance and Audit team, which although forms an integral part of the Rating Team is now a leading brand in its own right.

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