Chancellor’s £430m tax sting for shops – on same day that he offers a lifeline 

The Government will this week try to halt a massive £430million tax refund to shop owners – at the same time as boasting of a supposed ‘lifeline’ for small stores.

Chancellor Rishi Sunak is on Wednesday expected to confirm a £320million business rates stimulus package for shops, restaurants and pubs, to take effect from April 1.

But on the same day a legal action is being launched in the Supreme Court to prevent a separate refund of business rates – the taxes paid on properties used for commercial purposes.

The Valuation Office, an arm of Revenue and Customs, wants to overturn a Court of Appeal decision in 2018 that cash machines operating within properties should not be subject to separate business rates charges.

The case will be heard in the Supreme Court over two days.

If the Government’s challenge is unsuccessful, retailers will receive £428.7million in reimbursement of bills sent out over more than 15,000 cash machines, including thousands of convenience stores as well as major supermarkets during the past decade.

The move to stop the refund was last night described as ‘giving with one hand but taking with the other’. It is estimated that more than 500 cash machines have disappeared from shops since it emerged the Government would challenge the decision.

Remarkably, it will be heard at the same moment Sunak is expected to announce measures to increase access to cash through pubs and shops – as first revealed by The Mail on Sunday last week.

It is estimated that hundreds of cash machines have disappeared from shops since it emerged the Government would challenge the Court of Appeal decision. 

Robert Hayton, head of UK business rates at Altus Group, said during 2019 retailers withdrew 559 ATMs from their stores amid efforts to reduce tax liabilities resulting from the ongoing legal dispute.

He said: ‘Banks are closing branches and people are facing an uphill battle to access their cash yet retailers were squeezed for yet more tax despite picking up the slack providing a vital service.’

The latest business rates boost was revealed by the Government in December. It will see some independent stores receive discounts on their rates bills worth tens of thousands of pounds.

Chris Sanger, EY partner and head of tax policy, said business rates remained ‘a running sore for the Government’.

The £30billion property tax has been widely condemned as contributing to the decline of high streets.

He added: ‘The increase in the burden of business rates we have seen in the last decade is now really hitting businesses.

‘Previous consultations and responses have reduced the number of properties in scope but not materially reduced the costs for larger businesses and properties.’

Campaigners say the problem has also damaged town centres but revitalising the worst hit areas through wholesale planning reform or investment may take years.

Retailers account for about a quarter of the business rates haul.

But the sector has been battered in the last two years and suffered the loss of more than 100,000 jobs in the past 12 months alone as shoppers move online.

The collapse of giants including House of Fraser and Debenhams has prompted renewed calls for a rethink of the tax system.

So far the Government has done little other than apply sticking plasters to what many in the sector regard as an economic calamity.