The Community Infrastructure Levy administrative trap

The Community Infrastructure Levy Regulations 2010 (the Regulations) impose detailed administrative requirements on both Local Planning Authorities as charging / collecting authorities, and developers (whether or not claiming any exemptions or reliefs). Falling into the trap of not strictly complying with those administrative requirements is both easy and costly.

CIL and its administration

The Community Infrastructure Levy (CIL) attaches to ‘chargeable development’, i.e. development for which a planning permission has been granted, including by a development order[1] such as the Town and Country Planning (General Permitted Development) Order 2015. However, not all such development is liable for CIL – buildings into which “people do not normally go” or into which “people go only intermittently for the purpose of inspecting or maintaining fixed plant or machinery” are exempt, as is development which on completion has a gross internal area of less than 100sqm (unless it comprises one or more dwellings). In addition, most Local Authority charging schedules (i.e. the document that sets out the Local Authority’s CIL rates) exclude a range of other development types.

Where development is liable for CIL, the duty to pay is triggered when the chargeable development is commenced (Planning and Compulsory Purchase Act 2008, s. 208(3) & Regulation 33).

The administration of CIL relies primarily on a series of statutory notices[2] exchanged between the developer and the charging authority mostly before, but in some cases even during or after, the development takes place. The main notices and the stages at which they must be served are summarised below:

To be ‘valid’, a notice or claim for relief must:

• be on either the form of notice published by the Secretary of State or a form substantially to the same effect (see footnote 2);
• contain and be accompanied by the information required by the relevant regulation (the model forms published by the Government sets out the majority of the information requirements within the forms themselves); and
• be received before the relevant deadline set out above.

As long as the administrative arrangements as set out in the Regulations are strictly observed, whatever CIL is due (taking into account any applicable reliefs or exemptions), will become payable either within 60 days of commencement of the chargeable development, or in accordance with any instalments policy which has been adopted by the relevant charging authority (Regulation 70).

Failure to strictly adhere to these administrative requirements can be very costly. Payment will be due in full on:

• commencement, if nobody has assumed liability (in which case, liability defaults to the landowners) and assuming a valid commencement notice has been served; and
• a deemed commencement date, if the chargeable development has commenced either before the intended commencement date set out in any submitted commencement notice, or without a commencement notice having been served.

If development for which a relief is claimed commences before the charging authority has issued its decision, the relief claim lapses, and CIL becomes payable in full.

In addition, the charging authority can issue surcharges for (amongst others) failures to assume liability, to submit notices of chargeable development, to submit a commencement notice, and for late payment. Interest also accrues on late payments.

The cases

Simplified and laid out in the tabular form above, the process does not appear to be that complex. However, an increasing number of recent cases suggest that CIL is not easy to navigate and getting CIL wrong can have dire and expensive consequences.

Mistakes by self-build developers

In the case of Shropshire Council v Secretary of State for Communities and Local Government [2019] EWHC 16 (Admin), a self-build developer successfully applied for a self-build exemption for a scheme that would otherwise incur a CIL charge of £36,861.43. The developer sent an email to the Council advising them of their intended commencement date, but did not issue anything resembling Form 6. A couple of weeks later it started the development. The Council subsequently deemed a commencement date and issued a revised demand notice for the original full CIL amount plus a surcharge. The Developer’s appeal against the revised demand notice (arguing that the brief email notification comprised substantial compliance with Regulation 67) was upheld by a planning inspector. However, the planning inspector’s decision was quashed by the High Court which held that the email was “incapable of being a commencement notice, because it failed to comply with the requirements imposed by regulation 67”.

The case of Gardiner v Hertsmere Borough Council [2021] EWHC 1875 (Admin) concerned another self-builder and a particular quirk of the Regulations. In that case, the developer secured planning permission to partially demolish and extend their existing house. That development was not liable for CIL under Hertsmere’s CIL regime, hence there was no need for the developer to serve any notice before it started the development. However, during the course of the development, the developer discovered that the foundations of the existing building would not support the proposed extension.  The developer then proceeded to demolish and rebuild the existing dwelling and only then applied for retrospective planning consent under s. 73A of the Town and Country Planning Act 1990. At the same time, it submitted an assumption of liability notice and a claim for self-build relief. Planning permission was granted on 13 February 2020.

The Council issued a Liability Notice for the sum of £118,227.62 and argued in Court that, because retrospective consent authorises development from the date it started, CIL’s procedural requirements could not be satisfied and the development was therefore not eligible for relief. Unfortunately for the developer, the Court agreed. Regulation 54B(2)(a) requires that the claim is submitted by a person who has assumed liability. As liability does not crystallise until the permission is granted, it appears that the claim for relief did not satisfy 54B(2)(a) as at the date it was submitted. More persuasively, under Regulation 54B(3) any claim for self-build relief will lapse where the development commences before the Council has notified the claimant of its decision. Unfortunately, a retrospective planning permission takes effect from the date that the development it authorises was commenced. Hence, by definition, this procedural requirement could not be satisfied[3]. The development was therefore liable to CIL.

Mistakes by charging authorities

Surprisingly, it is not just developers who fall foul of the CIL administrative requirements. In the case of Alison Trent v Hertsmere Borough Council [2021] EQHC 907 (Admin), Ms Trent (a solicitor) secured permission on 10 February 2017 to demolish and replace her house. She claimed the self-build exemption, but did not submit an assumption of liability notice, as she understood that even without one, as landowner she would be liable for the CIL.

Although the Council prepared a liability notice on their internal system, they allegedly failed to either complete it, or send it to Ms Trent. Development then commenced without Ms Trent serving a commencement notice and there were various subsequent discussions from which the development control side of the Council will have realised that the development had started. Two years later, in August 2019, the Council inspected the site, deemed a commencement date and issued both a liability notice and a demand notice with surcharges for failure to assume liability and to submit a commencement notice.

On appeal, a planning inspector quashed the demand notice for incorrectly determining the deemed commencement date, held that no liability notice had been issued in 2017 and that the 2019 liability notice “served some two and a half years after planning permission was granted … cannot reasonably be described as meeting the requirement of Regulation 65(1)”.  The Council issued a further demand notice in 2020 and judicially reviewed the inspector’s decision.

The High Court agreed with the inspector. On the balance of probabilities, no liability notice had been issued in 2017 and the 2019 liability notice was invalid as it failed to comply with the Regulation 65 requirement that it be issued “as soon as practicable after the day on which the planning permission first permits development”. Furthermore, without a valid liability notice, there could be no valid demand notice (as it must refer internally to a valid liability notice). The result was that the Council could not claim CIL in respect of Ms Trent’s development, and doubtless ended up paying considerably more than the CIL purportedly due in legal costs.

The devil is in the detail

The salutary lesson of the recent CIL cases is that both developers and charging authorities must be very careful to strictly comply with administrative requirements of the CIL Regulations. From the developer’s perspective, a failure to do so can mean that reliefs lapse and that CIL becomes immediately payable in full together with surcharges and, where payment is late, interest. From the charging authority’s perspective, failure to meet the administrative requirements can mean that they lose their entitlement to recover CIL from a particular development altogether. Unfortunately, as the cases show, the devil really is in the detail.

[1] The Regulations define such permissions as a ‘General Consent’.

[2] The Government’s model forms for developers and charging authorities are available here: https://www.gov.uk/guidance/community-infrastructure-levy#forms-and-templates and for developers only on the government’s planning portal here: https://www.planningportal.co.uk/planning/policy-and-legislation/CIL/download-the-forms

[3] This is not necessarily the case where the original development was liable to CIL and the correct administrative procedures had been observed before any retrospective consent was secured (see CIL Reg 54B(3A).