Money Talk: We’ve had a rare outbreak of common sense...

At a time when the main news channels seem permanently occupied with the political quagmire around Brexit, it’s tempting to believe that everything else in business and politics is in a state of paralysis and terminal decline. That may of course still be the case, but at least two recent pieces of news (granted, not exactly ’front-page’ news) indicate that somewhere there are still people applying a little bit of common sense to the running of ’UK plc’.

The first of these was the ruling by the Court of Appeal (CoA) that operators of cash machines (ATMs) outside retail premises should not have to pay separate business rates on those machines, and that local authorities will have to refund the rates paid on them in England and Wales going back to 2010.

Now while most of this will go back to the large supermarket chains that fought the case all the way to the CoA, some of it will eventually come to the individual retailers who’ve suffered the same unfair taxation and that includes many petrol retailers.

It was never easy to understand why the Valuation Office introduced the original scheme in 2013 and then backdated it to 2010 in the first place. Before then, the assessment of a petrol retailer’s (just as an example) premises for business rates was largely determined by looking at the following: fuel volumes and therefore indirectly turnover and profitability; shop turnover and again indirectly profitability; and other facilities which included car wash bays, or even an ATM, and their associated turnover.

In essence the forms from the Valuation Office looked for financial figures from the main profit centres on site to establish overall turnover and profitability, and that became the basis of the site’s rateable value. Simple enough, and it meant that whatever the actual facilities on a site, if they were very busy and produced a lot of income overall, then the site was more valuable for rating purposes. If a site had all of the facilities possible, but turnover was still poor, then the rates would be lower.

indirect benefits

ATMs began to appear widely on forecourts in the late 1990s for several reasons: firstly they were profit centres in themselves banks and building societies paid rent to site owners for having them there, and often there was an annual bonus related to the activity of the machine. Secondly there were indirect benefits such as increased footfall.

Over time, the direct rental income from the machines has become lower but as bank and post office branch closures are announced seemingly every week, the petrol station ATM has addressed an essential social need in many local communities and so retailers are more likely to see the secondary benefits to their business in terms of footfall.

And this is why the separate rating of ATMs was unfair. If you had one you were taxed just for it being there, regardless of whether you saw any real benefit from it. If you had one that actually benefited your business overall, then you were taxed again: once for having it and again because your turnover was higher.

common sense

The second outbreak of common sense is also long overdue but not quite so advanced: the decision by the House of Commons Environmental Audit Committee (EAC) to recommend strict licensing of hand car washes.

There have been countless warnings about the often-dubious legality of activities related to hand car washes. But quite apart from those, the EAC was also concerned about two wider issues: the overall environmental impact of unregulated activity involving potentially dangerous chemicals; and the overall tax-avoidance of what is predominantly a cash industry.

But already there have been suggestions from some of the agencies who would be involved in regulation that they have suffered such large cut-backs in staffing and resources, because of austerity, that none of them are currently in a position to actually undertake any more work.

While the PRA and Car Wash Association (CWA) should be praised for their persistent lobbying to get this far, perhaps it’s time for the petrol retail industry to come clean and take a more principled stand. As one exasperated forecourt owner with a virtually ’dead’ rollover wash machine remarked recently, most of the competition from hand washes in his area was coming from other petrol forecourts and his reference to "hypocrites" was preceded by several expletives.

Should those site owners not take full responsibility for the hand-wash operations on their premises or remove them from their forecourts altogether?