24 January 2019

What is the Community Infrastructure Levy?

The Community Infrastructure Levy (CIL) is a planning charge imposed by local authorities to help deliver infrastructure to support the development of their area. The imposition and rate of CIL is at the discretion of the local authority. Where CIL is imposed, it is governed by the Community Infrastructure Levy Regulations 2010 (the Regulations).

There are a number of tightly regulated exemptions from CIL, including one for self-built houses. A recent case (R (Shropshire Council) v Secretary of State [2019] EWHC 16 (Admin)) demonstrates the inflexibility of the Regulations and illustrates how failing to provide a formal notice at the right time can have drastic consequences.

The Facts

The interested party, Mr Jones, was a self-builder who had obtained planning permission for a detached home with a triple garage.

A s.106 planning agreement was in place. This obliged Mr Jones to inform the council when development was commencing, which in turn triggered a £9,000 payment to the Council. Mr Jones was exempt from CIL under the self-building exemption. Although, in order for this to continue to apply, a commencement notice (under regulation 67) had to be issued to the council.

The works were about to commence and Mr Jones sent an email to that effect to the council as required under the s.106 agreement. The council acknowledged receipt of the email. Mr Jones did not, however, serve the commencement notice required for the CIL exemption.

As a result, the council issued a demand notice requiring immediate payment of the CIL charge (£39,891.43) on the basis that the development had commenced without service of a commencement notice. This sum represented the CIL charge plus a surcharge of £2,500 for 'invalid commencement'.

The council refused to accept the email as a commencement notice in spite of Mr Jones’ apologetic explanation. The council additionally made clear that 'the CIL process is separate from the planning process and is controlled very precisely by national regulations in relation to which the local authority has no discretion.'

The Appeal

Mr Jones appealed the demand notice, arguing that the email was 'substantially in compliance with the Regulations' and therefore should have been accepted as a commencement notice for the purposes of the self-building exemption.

The planning inspector hearing the appeal held that the oversight was not fatal to Mr Jones' case and allowed the appeal. He found that 'in practice, substance, form and all intent and purposes' the email had the same effect as the commencement notice required under regulation 67.

The council successfully judicially reviewed the decision. The inspector‘s earlier decision was overturned on the basis that the case law in this area '[did] not justify a process of simply looking to see the apparent purpose of the regulations… the Regulations [made] perfectly clear that the consequence of failure to comply is loss of the exemption; and failure to comply means failure to submit a notice under reg 67.'

In addition to the circa £40,000 incurred from failing to provide the commencement notice, Mr Jones may also have to pay the council's legal costs, making for a costly oversight in total.

Lessons learned

The CIL regime is rigidly controlled by the Regulations and the court failed to find any discretion in applying the Regulations. It is prudent to assume the Regulations will be followed strictly. Anyone looking to rely on exemptions must comply not just with the substance, form and spirit of the Regulations, but in the manner in which it is prescribed. Unfortunately for Mr Jones, getting the substance right was not enough.

We have significant experience of advising landowners, developers and local authorities on various issues which emerge from the CIL regime, including compliance with the Regulations, appeals and the interrelationship of the regime with section 106 obligations.

For more information or to discuss any of the issues raised in this article, please contact Alex Minhinick or Gary Soloman.

Key contact

Gary Soloman

Gary Soloman Partner

  • Head of Planning and Compulsory Purchase
  • Regeneration and Highways
  • Compulsory Purchase and Compensation

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