Update: Breach of Community Infrastructure Levy (CIL) provisions and the consequences

Developers should take note of a recent Planning Inspectorate decision on triggering the Community Infrastructure Levy (CIL) liability. Learn how the Goughs’ team can support you if you need more detailed advise from a property solicitor or real estate solicitor.

The Community Infrastructure Levy is effectively a tax payable on new housing development to contribute towards investment in the local community (e.g. education and healthcare services).

The Planning Inspectorate publishes the Community Infrastructure Levy appeal decision notices with an aim to remind developers and landowners about the CIL Regulations and the consequences of breaching the provisions.

A recent decision focused on whether demolition works triggered the payment of the Community Infrastructure Levy (the developer had failed to submit a Commencement Notice to the Council). It was not disputed that demolition works had begun, but it was argued that they were only carried out to enable retaining wall structures to be constructed in relation to the planning permission and that this did not constitute commencing works on the development itself. Unfortunately for the developer, the description of the development granted by the planning permission had expressly included demolition and it was therefore concluded that there was a failure to submit a commencement notice and the appeal was dismissed.

The Community Infrastructure Levy (CIL) process involves the following steps:

  • Step 1   Developer submits a CIL Questions form with planning application (containing sufficient information to calculate the CIL liability).

  • Step 2   Council issues a CIL Liability Notice with planning decision (confirming the amount of CIL due).

  • Step 3   Developer must submit an Assumption of Liability Notice (to confirm who will pay CIL) and a Commencement Notice prior to commencement of development works.

  • Step 4   Self-build developers may claim Exemption or Relief.

  • Step 5   Council issues a CIL Demand Notice confirming the payment dates (payment by instalments may be allowed).

  • Step 6   Council acknowledges receipt of payment.

The Assumption of Liability and Commencement Notices form the basis on which the CIL payment dates are set.

The Regulations provide for a range of proportionate enforcement measures against breach and in this appeal failure to comply meant that a penalty surcharge was applied. In cases such as these, the person liable loses the right to pay by instalments and, depending on the size of the development, the amount of CIL due could, therefore, create a significant cash-flow problem.  

This decision serves as a useful reminder to developers to take care not to implement a planning permission by starting on site inadvertently and to take appropriate advice in advance.  Breach of the CIL process may result in penalty surcharges and the loss of the ability to pay by instalments.  Commencement on site may also trigger additional planning obligations and contractual liabilities, e.g. uplift payments attached to the implementation of a new planning permission.

If you require any advice in relation to the Community Infrastructure Levy liability, or any other aspects of development, please get in touch with one of our Real Estate, Land and Development Experts.

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