Town and country planning – Community infrastructure levy (CIL) – Late payment surcharge – Interested party failing to pay CIL instalments falling due – Defendant allowing appeal against imposition of late payment surcharge – Claimant collecting authority applying for judicial review – Whether surcharge contingent on service of liability or demand notice – Whether issue/service of revised liability and/or demand notice extinguishing liability for surcharge already incurred – Application granted
The claimant, in its function as local planning authority, granted planning permission for a development with mixed office and residential use. Before that grant, a section 106 agreement was executed requiring the provision of affordable housing within the development.
The interested party developer served on the claimant a notice of assumption of liability for community infrastructure levy ( CIL) under regulation 31(2) of the Community Infrastructure Levy Regulations 2010 in respect of the planning permission. The claimant, in its functions as charging and collecting authority, issued and served a liability notice in respect of the planning permission pursuant to regulation 65(1) of the 2010 Regulations, notifying the interested party that payment of CIL was due in two instalments. The interested party claimed mandatory social housing relief because the planning permission included social rented housing as required by the section 106 agreement.
The interested party commenced the development but failed to pay the CIL instalments when they fell due. It then submitted a non-material amendment to the scheme under section 96A of the Town and Country Planning Act 1990 which resulted in a minor change to the chargeable amount, requiring the claimant to issue revised liability and demand notices. It also imposed late payment surcharges for the outstanding CIL.
The interested party appealed against the imposition of the surcharges on the basis that insufficient time had elapsed following service of the revised liability and demand notices, which cancelled the previous notices. An inspector appointed by the defendant secretary of state allowed the appeal on the basis that the claimant had acted prematurely and had no power to impose the surcharges.
The claimant applied for judicial review on the ground that the inspector had misinterpreted the 2010 Regulations. The defendant conceded the claim but the interested party continued to contest it.
Held: The application was granted.
(1) Liability to pay CIL arose on commencement of the chargeable development, which was the date when any material operations began to be carried out on the land. The determination of the sum due and the date on which payment was due was provided for in regulations 69B-71. The trigger for imposition of the late payment surcharge under regulation 85(1)(b) was where the relevant payment was not received after the end of the period of 30 days beginning with the day on which payment was due. That was the operative phrase for the purposes of the surcharge timetable.
It followed that the basic structure and operation of the 2010 Regulations was that: liability to pay CIL arose at the commencement of the development (regulation 31(3)); CIL was payable in accordance with regulation 70 and the relevant instalment policy; and where payment was not received after the end of 30 days beginning with the day on which payment was due a power to impose a surcharge arose (regulation 85(1)(a)).
(2) The purpose of a liability notice was to record and inform a party of liability for CIL. The purpose of a demand notice was to record and inform when payment, pursuant to such liability was due and what sum, including any surcharge or interest. Each notice played a part in the administration of the CIL scheme by informing the person liable to pay CIL of certain material facts regarding their specific case. Their role was not, however, to determine when liability arose or when payment was due: Oval Estates (St Peter’s) Ltd v Bath & North East Somerset Council [2020] EWHC 457 (Admin); [2020] PLSCS 36 followed.
It followed from the collecting authority’s administrative role that a revised liability or demand notice might reflect and record a change to the quantum of liability and/or payment dates but it did not itself change the genesis or origin of the liability. In particular, a revised notice was not capable of wiping the slate clean by extinguishing liability to pay CIL surcharges or interest which had already accrued.
(3) Regulation 71(4) demonstrated that express words were used in the 2010 Regulations where it was intended to tie the calculation of the date when payment was due to the issuing of a demand notice. It could not be the intention of the regulations that past failures to pay CIL liability, which accrued upon commencement under regulation 31(3), should be capable of being expunged merely because some event had occurred requiring service of a revised demand notice. That would provide developers with a perverse method of avoiding late payment surcharges by transferring CIL liability to another entity pursuant to regulation 32 which required the collecting authority to issue a revised demand notice, or by applying for a non-material amendment to alter the chargeable development in a minor way in order to generate the need for a revised liability and demand notice. The same would result from an inadvertent administrative error on behalf of the collecting authority which generated the need for a revised demand notice.
(4) Liability to pay CIL and the date and quantum of payments was not determined by the issue of liability or demand notices. Rather, those notices recorded the liability and terms of payment. Applying the correct construction of regulation 85(1) to the facts of the present case, the claimant had lawful authority to issue the surcharge notices. The interested party failed to pay the first instalment when it became due, so that the entire amount became due immediately pursuant to regulation 70(8)(a). When the full amount of CIL was not received after the end of 30 days beginning with the day on which payment was due, the claimant was entitled to impose a late payment surcharge in accordance with r regulation 85(1).
The inspector erred in finding that the claimant had no lawful authority to impose a late payment surcharge with respect to unpaid CIL. Liability for a late payment surcharge was not contingent on the service of a liability or demand notice. The issue/service of a revised liability and/or demand notice did not have the effect of extinguishing liability for a late payment surcharge which had already been incurred.
Douglas Edwards QC and Alexander Greaves (instructed by Judge and Priestley LLP) appeared for the claimant; Christiaan Zwart (instructed by Howard Kennedy LLP) appeared for the interested party.
Eileen O’Grady, barrister
