ATM Rental

Rental received from ATM operator fixed in place machines in his shops

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Have been looking into above re a current client.

https://www.gov.uk/hmrc-internal-manuals/vat-finance-manual/vatfin2630 has the following

"Rental charges

Where the ownership and operation of an ATM is retained by the ATM provider, the site owner may be paid a fee by the ATM provider as consideration for the provision of a site for the ATM within his premises. If the ATM is installed in such a way that it may be re-sited, the fee charged by the site owner is in respect of a standard rated supply of an exclusive right to the ATM provider to supply a facility to obtain money."

Based on that, and the fact the machines are bolted to the floor, my view is that this does not apply, accordingly I assume the agreement is a supply of land by my client to the ATM owner, and in absence of an option to tax, such a supply is exempt.

My client is vat registered but does not opt to tax properties, in fact only one of the shops in question has vat charged on the rent to my client, accordingly I think the supply by my client is an exempt supply of land, but would be interested if anyone differs in view or has experience re these sorts of arrangements.

I do , of course, need to consider partial exemption  if it is an exempt supply but expect the supply is deminimis.

Input appreciated

Replies (12)

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By frankfx
04th Feb 2019 15:34

Bolted to the floor in itself would not mean it can not be re sited
I would expect the ATM to be securely bolted.
The ATM owner sholud be able to address the VAT status of the supply. Which you can confirm to your own satisfaction.

Thanks (1)
Replying to frankfx:
paddle steamer
By DJKL
04th Feb 2019 15:54

They appear to leave vat issues to the Retailer .

I just received the agreement from my client (since my original post), they appear to leave the responsibility solely with the retailer by stating,

"shall pay to the Partner" (retailer) "a monthly fee for the use of the ATM Locations (Monthly Fee) including vat( if applicable)"

and further down

"the partner expressly agrees to self-invoicing"

with later

"Notwithstanding the self-invoicing mechanism provided for in this Agreement, the Partner will remain fully liable for any vat, sales tax or excise duties as if it issued the invoices to XXXXXX"

The agreement does have plans re each shop showing exact location within shop each machine will be located, so it has a feel of a supply of land, in addition my client does nothing re the operation of said machines, which does again feel like a mere lease of land.

"An ATM will be installed at each of the Partner Sites at the specific location as detailed on the floor plans attached as Schedule 2 (The ATM locations)"

My gut feeling is it is an exempt supply, but given quantum potentially involves a few k vat a year looking for any doubts.

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Replying to DJKL:
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By WhichTyler
05th Feb 2019 09:29

DJKL wrote:

"the partner expressly agrees to self-invoicing"

Do they mean self-billing? If so it's the providers problem isn't it?

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Replying to WhichTyler:
paddle steamer
By DJKL
05th Feb 2019 10:00

Afraid not, there is a little clause saying,

"Notwithstanding the self-invoicing mechanism provided for in the Agreement the Partner will remain fully liable for any vat, sales tax or excise duties as if it issued the invoice to XXXXXX. The Partner shall notify XXXXXX in writing of the applicable rate of VAT to be used by XXXXX for invoicing purposes and shall be solely responsible for the correctness of the reported rate of VAT"

Ball is in my court.

Thanks (0)
paddle steamer
By DJKL
04th Feb 2019 16:48

Vat Notice 742 gives me the reassurance to go to press-

"2.6 Examples of supplies that are licences to occupy land

The following are examples of licences to occupy land. This list is not exhaustive:

granting a specific space for the installation of a ‘hole in the wall’ cash machine (ATM)"

So, they are exempt, vat returns can now be sorted and submitted.

Thanks (1)
Replying to DJKL:
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By Bobbo
05th Feb 2019 09:18

Is there not a distinction between a 'hole in the wall' cash machine which is built into the wall and one which is essentially freestanding but bolted to the floor for obvious security purposes?

If the machine is 'only' bolted to the floor, it would not be impossible to re-site the machine within the premises if necessary. Does your client's agreement contain any provisions re moving the machine within the premises?

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Replying to Bobbo:
paddle steamer
By DJKL
05th Feb 2019 09:31

No- the position of each machine is appended to the agreement on location plans for each shop, the agreed position being shown and displayed and referred to in the agreement.

The agreement says,

"An ATM will be installed at each of the Partner Sites at the specific location as detailed on the floor plans attached as Schedule 2 (the ATM Locations)"

Accordingly the owner of the machine has no right to place it otherwise as agreed, whilst it could physically be unbolted and moved so could a hole in the wall machine with a breaker and some time, the fact is the owner may not do this as has no right to do this.

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RLI
By lionofludesch
05th Feb 2019 10:15

Here's one being "re-sited" in Fintona, Co Tyrone.

https://www.belfasttelegraph.co.uk/news/northern-ireland/digger-used-to-...

Thanks (2)
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By chasmeehan
06th Feb 2019 10:41

In addition to the VAT issue, which sounds from the above that is it exempt if on the outside wall and taxable if sitting in the shop, has your client considered the possible Business Rates charges on both types (inside and outside) if the VOA are successful at the Supreme Court ?
https://www.colliers.com/en-gb/uk/insights/property-news/2018/1206-colli...

I do recognise that there is an argument that with bank closures an ATM is perceived as a public good by consumers and should be shielded from all public charges - surprised that this has not be championed more strongly in the public arena

Thanks (1)
Replying to chasmeehan:
paddle steamer
By DJKL
06th Feb 2019 12:46

Why taxable if in the shop?

Why does location dictate vat treatment?

Not convinced re the public good, these machines are very expensive for those who use them.

I am struggling to discern difference between an actual hole in wall and equivalent in store installation, why might there be a difference, to me the test is whether particular discrete areas are leased/licensed to the ATM operator (they are within my client's agreement) and constitute a right over land.

I interpret that they do in this instance and are therefore exempt but more than happy, if anyone can point me to legislation giving clarification.

Please note HMRC vat notice 742 puts "Hole in Wall" in inverted commas itself at 2.6.

2.6 Examples of supplies that are licences to occupy land

"granting a specific space for the installation of a ‘hole in the wall’ cash machine (ATM)"

the key point to me is "specific space", the use of inverted commas re "hole in the wall" to me suggests an actual hole in the wall is not needed to make such an agreement an exempt supply of land, well at present that is what I and my client will be arguing with HMRC unless someone can kindly give me something else to hang the vat treatment upon.

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Replying to DJKL:
RLI
By lionofludesch
06th Feb 2019 12:57
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Replying to lionofludesch:
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By Tax Dragon
06th Feb 2019 13:43
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