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HMRC internal manual

VAT Finance Manual

Money (including transfer of money) and related services: automated teller machines (ATMs): other charges

In recent years there has been an increase in the number and type of business involved in the ATM industry and a corresponding increase in the number of sites with ATM machines where people can gain access to their cash for a fee, for example a pub, a shop etc. These new businesses in the ATM network usually either own the premises where the ATM is sited or own the ATM but not the site or possibly even own a franchise, with each person in the chain apparently receiving a proportion of the convenience fee charged to the customer for their service.

It is important to establish what each person in the chain is supplying and not to treat each party as if it is the one making the exempt financial supply to the final consumer, even though they may be paid an amount equal to a percentage of the convenience fee. In reality, it is unlikely that a retailer is being paid by the customer of an ATM for a service of dealing with money since the convenience fee is paid direct to the LINK member, and it is the LINK member that is providing the exempt financial service. It is more likely that the retailer is making a taxable supply to the ATM operator (stocking the machine with cash, supplying till rolls etc), for which he receives a fee based on a proportion of the convenience fee.

The tribunal case of Concept Direct Limited (CDL) VTD 19721 highlighted this point.

CDL identified suitable sites and secured contracts for the installation of ATMs for an ATM operator. It was paid a commission by the ATM operator based on a percentage of the convenience fees. CDL considered that since their fee was calculated by reference to the convenience fee it was exempt under Group 5, item 1. HMRC took the view that CDL was not providing any sort of financial service to the ATM operator and therefore their supplies were taxable. The Tribunal agreed with HMRC and found that CDL provided a taxable service of identifying suitable sites for ATM machines and securing a contract for their installation. The CDL decision stated further that ‘liability to VAT is governed by the nature of the supply not the form or method of calculation of the fee’.

We would not automatically assume that a fee charged by a party involved in the operation of an ATM, other than a convenience or interchange fee, was taxable. The supply must be considered in the light of the available exemptions. For example where there is evidence that the supplier effects the transfer of money by acquiring transactions, netting off and settling between the bank and their customer we could consider the possibility of exemption under item 1. VATFIN2260 gives further guidance on when a transaction is exempt as a transfer service.

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.

If you have any questions concerning rental charges on ATMs please contact the Property UoE.