In a decision which may have far-reaching consequences, an appeal by several supermarkets and a cash machine operator against the decision to vary the 2010 ratings list to include hole in the wall cash machines as standalone premises for the purposes of business rates has been dismissed by the Upper Tribunal (Lands Chamber). The impact of the decision is that certain ATMs will incur separate business rates charges which may prompt a move away from the currently widespread free cash withdrawals.

The decision follows changes in 2014 as to how business rates are assessed. Previously, where an ATM operated by a third party was based in a larger business premises, the occupier of the larger premises (commonly a supermarket, petrol station or convenience store) would pay business rates for the whole premises including the ATM. Following the Upper Tribunal's decision, certain ATMs will now be treated as separate sites with separate occupiers and the occupier of the ATM will be liable for the ATM’s own business rates.

The decision does not affect all ATMs. Those located within premises (commonly banks) where the business operates the ATM and occupies the main premises and those located indoors in premises such as supermarkets will not be affected and business rates will not change. However, ATMs located in external walls of premises which are operated and occupied by a third party will be affected and business rates will be charged separately for the main premises and for the ATM itself.

With around 70,000 ATMs in the UK and with bills for the additional business rates to be backdated to 2010, this ruling looks likely to have significant implications for retailers, ATM operators and the commercial viability of affected ATMs. Retailers and operators with hole in the wall ATMs will undoubtedly consider whether they should change their operations, for example, by passing on the additional cost to customers through charges for using the ATM or seeking to move them so that they are located internally rather than externally. An appeal to the Court of Appeal is expected so watch this space. However, in the meantime, those retailers and operators looking to install ATMs within premises should consider carefully the impact of this decision when deciding the location of the ATM and drafting of the documents governing how the ATMs are operated and occupied.