Government issues guidance on Community Infrastructure Levy contribution payments

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In light of the COVID-19 pandemic, the Government has published guidance on postponing payments of contributions typically made by developers, such as those under planning obligations and Community Infrastructure Levy (CIL). The aim is to alleviate the financial pressure on developers which, in turn, may be a barrier to development in these difficult times.

The proposals can be summarised as follows:

The Community Infrastructure Regulations will be amended to allow more flexibility to developers. Under the current regulations, the date on which payment is due cannot be changed, charges are payable when development commences and there are penalties (interest payments) associated with late payment.

Under the new temporary measures being proposed, charging authorities will be able to defer CIL payments and waive the interest penalties associated with late payment. Charging authorities will also have an element of discretion to refund interest already charged, where appropriate, for developers that have an annual turnover below £45 million. Authorities are being encouraged to use their discretion wisely in considering whether it would be prudent to take enforcement action. Authorities are being encouraged to engage with developers. The proposed changes will not, however, benefit developers with a turnover over £45 million.

There are no proposals to assist developers in relation to payment of contributions under a Section 106 Agreement. However, under the current circumstances, Local Authorities are being encouraged to take a pragmatic approach when seeking to negotiate payment of planning obligations.

Clearly, it’s in the interest of all parties if Local Authorities would be willing to negotiate planning obligations. Once a payment is made under a Section 106 agreement, it must be used for that particular purpose within a specified timeframe and, if it is not, it would be returned to the developer together with interest. This will allow Local Authorities to focus on provision of essential services in their response to COVID-19. The Government has encouraged “a pragmatic and proportionate approach to the enforcement of planning obligations” during this period and it’s hoped that this will be exercised by Local Authorities to give developers some flexibility.