Planning law – the Community Infrastructure Levy
The Community Infrastructure Levy (CIL) was introduced as part of the Planning Act 2008 as a planning charge to help local authorities in England and Wales deliver improved infrastructure in their areas. It came into force two years later on 6 April 2010 through the Community Infrastructure Levy regulations.
Local Authorities are free to decide if they will charge in their area; new developments that create a gross internal area of 100sq m or more, or new dwellings, are all potentially liable for the levy.
There are also some areas that may be eligible for relief or exemptions, such as for charitable institutions and social housing. For new developments that are in this category, a Commencement Notice form must be served prior to the project commencing, otherwise there are three potential implications:
- The exemption or relief can be lost
- The full CIL charge becomes payable
- A surcharge might be applied
Why following the CIL process is critical
The issue of exemption from CIL was a particular challenge for a client with whom LCF had not worked with before on planning matters, but who approached us to help them understand the impact of the CIL. The client got planning permission for the demolition of a building to replace it with a new, larger building which would become a personal dwelling for the client.
The client was in a geographical area where the local authority applied the CIL, however in line with the Regulations, exemption is available for a self-builder who is building a dwelling as a personal property to live in. The CIL, had it been applicable, would have been over £50,000 but on the basis of an initial liability notice confirming exemption for this category of building, the client proceeded with the build project.
Working with an architect, the client proceeded to demolish part of the structure. When the local council became aware of this it identified that a Commencement Notice had not yet been served, as required to retain the exemption, or an assumption of liability notice. As a result, the Council maintained that the client lost their exemption and the Council began the process of recovering the CIL charge, as well as a £2,500 surcharge for not providing a Commencement Notice and a further £50 surcharge for failing to provide an assumption of liability notice before commencing the work. A total invoice for more than £55,000 was issued on 1 April 2020.
Commissioning specialist support
The client contacted LCF for assistance to help manage the situation with the Council and to see if there was any way to reinstate the CIL exemption. There was a limited timeframe of 28-days in which to lodge a statutory appeal so the client was keen to get professional support quickly.
On initial legal review however, it was identified that a statutory appeal was not the best course of action, as it is limited in its scope and it would be difficult to argue that the work had not commenced because the demolition phase of the project was listed in the description of the development.
Further investigation identified an update to the Regulations meaning that the council was seeking recompense in error. Whilst prior to September 2019 all exemption options would be lost if the process was not correctly followed, a subsequent update recognised the draconian impact of that ruling. As a result, any liability notice issued after September 2019 for non-compliance would include a mandatory surcharge of £2,550 but the self-builder would not lose the self-build exemption.
This meant that the process the client needed to follow was not a statutory appeal but rather a judicial review as, put simply, the Council had got the law wrong. The date at which they issued the revised notice for more than £55,000 was after September 2019 meaning the Council could no longer argue that the right to self-build exemption was lost.
A win for the client
We obtained a further opinion from a specialist planning barrister who confirmed that a judicial review would be the right course of action for the client. With this solid legal grounding, a pre-action letter was issued to the Council stating all of the facts of the case and referencing the update to the Regulations. The Council acknowledged the argument put forward to them was correct and agreed to rescind the charges and re-issue a bill for the mandatory surcharge of £2,550 only.
For those councils that apply the CIL charges, this is direct income for them and so where possible, they will seek to recover charges when the CIL process is not followed correctly. For our client, however, this would have resulted in a significant charge incorrectly applied as a result of an innocent oversight. Without legal intervention, it is likely this would not have been corrected.
For further information contact Tim Axe at email@example.com or call 01423 851115.
Tim specialises in agricultural and rural planning matters and the removal of agricultural occupancy restrictions. With a local government background, he assesses development potential, local plan representations relating to allocation of land for development and acts as a planning applications agent.
Further advice please contact Tim Axe on 01423 851 115 or firstname.lastname@example.org