Despite being in existence for a decade, questions continue to crop up about the Community Infrastructure Levy Regulations 2010. Caroline Stares takes a look at how to approach 10 of them.
1I’m worried that I’m going to have a huge CIL bill. Can I pay in increments as I build out?
Community infrastructure levy (CIL) normally has to be paid in full within 60 days of implementing your planning permission. However, if your planning permission expressly allows your development to be carried out in phases, you can pay the CIL for each phase separately. CIL (for the whole development or a phase) can also be paid in instalments if:
- the charging authority has an instalment policy;
- CIL liability has been assumed; and
- a valid commencement notice has been received by the collecting authority in time.
If payment is late, the full outstanding CIL balance and interest will become payable immediately, and the charging authority may impose surcharges.
But in light of Covid-19, current guidance encourages authorities to allow payment in instalments and waive late payment surcharges. Legislation is proposed to allow authorities to defer payments, temporarily disapply late payment interest and return interest already charged for small and medium developers.
2Is there any other way that I can limit my CIL liability? For example, are there any exemptions that apply?
Various reliefs and exemptions can reduce your CIL bill. Two common ones are:
- Mandatory social housing relief –this will apply to most developments incorporating: rented affordable housing provided by a local authority or registered provider; and/or shared ownership; and/or certain discounted rented units provided by other bodies, subject to certain conditions being satisfied. The amount of this relief is deducted from the overall CIL liability.
- In-use exemption – parts of any “in-use” buildings that will be retained as part of the development, or which will be demolished before completion of the chargeable development, will be deducted from the floorspace figure when calculating the chargeable area subject to CIL. Other reliefs and exemptions may apply to: certain minor development; residential annexes and extensions; charitable development and self-build housing.
3I want to use the “in-use” exemption. What do I need to show?
The in-use exemption will apply if part of a relevant building has been continuously used for a lawful planning use for at least six months within the three years preceding the date the planning permission first permits development (usually the date of the permission, although there are different rules for outline and phased permissions).
You must provide the collecting authority with sufficient information for it to establish that the building was in use for the relevant period. Evidence could include: leases, licences, utility bills, business rates or council tax bills, time-stamped photos of the building in use and sworn statements from occupiers confirming the same.
4I’ve already implemented the permission, but I forgot to serve the commencement notice. Is this a problem?
Yes. Usually, after the collecting authority has issued the liability notice, a developer must submit a commencement notice to the collecting authority at least a day before the development is commenced. A copy must be served on all landowners of the development site (or relevant phase). It is important to ensure that you receive an acknowledgment of receipt from the collecting authority before starting works. If the commencement notice isn’t received by the authority before commencement, the CIL is due immediately; you will lose the right to pay any CIL in instalments; and the authority may impose a surcharge of 20% of the chargeable amount, capped at £2,500. Also, if your liability notice was issued before 1 September 2019, any exemptions or relief for residential annexes, self-build housing, charitable development or social housing will be lost.
5I need to submit a section 73 application to vary the position of one of the blocks. Does that mean more CIL?
No, if all other factors remain the same. To determine whether any extra CIL is payable under a section 73 permission, the charging authority must calculate the notional chargeable amounts for the original permission (A) and the section 73 permission (B). This is done by calculating the CIL liability (including deducting the amount of any reliefs) for A and B as if they both permitted development on the same date as A, so any changes to indexation or CIL rates between the granting of A and B will not have any effect at this stage.
If the notional amounts for A and B are the same, the charging authority should reissue the liability notice which relates to A and the amount of CIL payable will be the same.
6What if I also apply for a slightly bigger block?
Then yes, your CIL bill will be higher. As above, the charging authority will need to calculate the notional amount for your original permission (A) and the new section 73 permission (B). Increases in floorspace approved by B will mean that the notional amount for B is higher than A, so extra CIL will be payable.
The charging authority will determine the CIL liability for B using a complex formula which effectively generates the chargeable amount for the extra floorspace in B, based on the latest indexation and any new CIL rates (watch out for this), and adds this to the chargeable amount for A.
You can, though, abate any CIL already paid under A from B’s CIL liability.
7I paid the CIL for my development when it was first implemented, but I have since secured a section 73 permission for a slightly smaller scheme, which I intend to build out. Is there any way that I can get some money back?
If your section 73 permission (B) results in a lower CIL charge than the scheme you implemented (A), and you change to scheme B, the collecting authority must repay you the overpayment as soon as practicable. However, no interest will be included because the overpayment stemmed from a section 73 permission.
Be careful of any change in circumstances for section 73 permissions that could inadvertently increase your CIL bill even with less floorspace, for example, because you are no longer entitled to the same amount of social housing relief as the number of affordable dwellings is significantly reduced or certain conditions aren’t satisfied anymore.
8I’ve submitted an assumption of liability notice for a development site that I’m selling. Can I transfer the liability on the sale?
Possibly. It depends on whether the CIL has become payable. Liability to pay CIL can be transferred to a different person at any time up to (but excluding) the date the final CIL payment is due. To do this you must submit a liability transfer notice to the collecting authority.
The liability is transferred on the day on which the collecting authority receives a valid transfer liability notice. The authority must send an acknowledgment of receipt to you and to the person who is now liable.
9I’ve received a CIL demand notice charging me surcharges for failure to assume liability and submit a commencement notice but I haven’t received a liability notice yet. What can I do?
You can appeal to the secretary of state on the ground that the collecting authority didn’t serve a liability notice in respect of the chargeable development to which the surcharges relate. The appeal must be made within 28 days of (and including) the date the surcharge was imposed.
However, it’s important to note:
- A liability notice should be registered as a local land charge. This will bind the land and any purchaser and owner of the property is deemed to have knowledge of the liability notice, even if the notice was served on a previous owner.
- If an e-mail address was provided on the planning application form as a form of communication, then the authority can e-mail the liability notice rather than sending it by post.
10The amount quoted on my liability notice is wrong. The chargeable floorspace hasn’t been measured correctly and the in-use exemption hasn’t been applied. I think I’m out of time for an appeal. What can I do?
This is a difficult one. A request to review a chargeable amount must be made within 28 days of (and including) the issue of the liability notice. If you’re aggrieved by the outcome of that review, you can appeal within 60 days of (and including) the issue of the liability notice.
If you miss these limits, the collecting authority would not be required to issue a revised liability notice in this case, but it may be persuaded to do so.
Tell the authority as soon as possible, providing evidence of the correct chargeable floorspace and that the building was “in-use” (see question 3, above). The authority has a duty to act reasonably. However, it would be difficult to judicially review a refusal to issue a revised notice, as all statutory appeal routes should have been exhausted first.
If the authority issues a revised liability notice to address one of the issues, this restarts the clock for an appeal on the remaining issue. Good luck!
Caroline Stares is an associate at Hogan Lovells International LLP. Her answers are based on the most recent amendments to the Community Infrastructure Levy Regulations 2010, which came into force on 1 September 2019. Those amendments do not generally apply to planning permissions granted, or liability notices issued, before that date.