In our last post, we shared an update on the successful outcome of an appeal to the Valuation Office Agency over Community Infrastructure Levy (CIL) that we were running. Whilst still reveling in that decision, the same client asked us what he should do next – when and who to pay and how to document the process – and it brought us up short on how unfamiliar we were with the protocols for CIL beyond completing the initial CIL Questionnaire and securing permission. So, delving into an area that is usually beyond our planning remit, we reacquainted ourselves with the 2010 CIL Regulations (amended again in 2018) for a refresher on the formalities between consent and commencement. Here are a few key pointers that you might find useful:
- Alongside your planning consent, you should also have received a CIL liability notice for your development from the relevant ‘Collecting Authority’. In most cases, this is the same as the ‘Charging Authority’, which is usually the Council that granted your permission. If you don’t get this with the decision notice then chase your case officer for it;
- The liability notice is issued to the applicant, the developer and whoever has assumed liability for the scheme and sets out the amount of CIL due and details of the payment procedure. At this point, an assumption of liability form should be submitted (or ideally with the application before planning permission is granted) confirming who will be responsible for paying the levy. On receipt, the Collecting Authority should send an acknowledgement to the liable party. Any claim for exemption or relief (through self-build, social housing or charitable relief) must also be submitted at this point;
- Anyone can assume liability to pay CIL, but if no one assumes responsibility before development commences, the owners of the land will be liable to pay and will not be able to benefit from any instalment regime the authority may have in place. Where it is one person, they are responsible for all payments, but where there are more, the Collecting Authority must apportion liability (using a specific formula). Where a party has assumed liability yet failed to pay all its charge, the Collecting Authority may issue a default liability notice to all the landowners to pick up the tab;
- Parties can transfer liability at any time up to the day before the date when final payments are due (worth knowing if your project changes hands/you’ve got a new developer on board). This is done by submitting a ‘Transfer of Assumed Liability’ form to the Collecting Authority, who in turn must send an acknowledgement to both the person liable to pay and the person applying for the transfer;
- Once you’ve assumed liability and received your liability notice, you must submit a commencement notice to the Collecting Authority, who must again acknowledge receipt. The purpose of this is to advise of the start date of the development, and it must be received by the Collecting Authority at least one day before commencement is due (otherwise, you might have to pay surcharges and lose the ability to pay by instalments);
- If a Collecting Authority knows development has commenced but has not received a commencement notice (or has received the notice but believes it started earlier), it must determine when the development commenced. This is known as the ‘Deemed Commencement Date’ and will be used as the basis for all subsequent demand notices;
- The next stage is for the Collecting Authority to issue a demand notice, which is a reminder to liable parties of how much they owe and by when. A revised demand notice must be issued if the commencement date, levy amount or instalment options subsequently change, and may also be issued in other circumstances, such as if there is a new liable party involved;
- The demand notice must explain the payment periods. Where a charging authority wishes to allow payment by instalments, they must have published an instalment policy on their website. This can help with the viability and deliverability of development as few, if any, projects generate value until they are complete. The charging authority decides the number of payments, the amount and the time due, and can revise or withdraw the instalment policy as and when they see fit;
- Where no instalment policy is in place, payment is due in full at the end of 60 days after development has commenced. If instalment terms are broken, or payment is not made after 60 days where there is no instalment policy, the authority must issue a demand notice requiring the full amount of money immediately;
- There are also other ways of making ‘phased’ payments. Where the planning authority is willing, a planning application can be subdivided into phases for the purposes of CIL, which is particularly useful for large scale projects. Both detailed and outline planning permissions can be treated as phased developments, such that each would be a separate ‘chargeable development’ (and also benefit from any instalment policy in force). However, the principle of phased delivery must be agreed from the outset – you can’t just introduce it late in the application process to suit your cash flow;
- Once paid (the Collecting Authority must issue a receipt for each payment made), collecting authorities are required to pay back any overpayments and must pay interest on these (although notably no interest will be paid on Section 73 amendments that reduce the CIL liability of an original scheme). Exceptions to this are when an overpayment is so small that it would be outweighed by admin costs, or if the overpayment can be credited against a new CIL liability on the site, under what is known as abatement provisions;
- Abatement provisions kick-in where CIL payments made in respect of a commenced (but not completed) development can be credited against the liability for a revised scheme under a new planning permission, on all or part of the same land. This is to avoid double-charging as schemes often change during the course of development (although you cannot apply for an abatement post-completion). Again, no refund is payable if a later scheme has a lower CIL liability than the original one paid;
- Similarly, in certain circumstances, the floor-space of a building which was demolished during the development of a previous scheme can be taken into account in calculating the CIL for a revised scheme (ie a demolition ‘credit’). But importantly this must be requested within 3 years of the date of the original consent and the demolished buildings must have been taken into account in the revised CIL calculation if they had not already been demolished;
- And finally…… just in case you were thinking about stalling on your bill, Collecting Authorities have various proportionate enforcement measures which they can draw on to penalise and discourage late CIL payers. These range from ‘light touch’ surcharges to the issue of CIL Stop Notices (prohibiting any further development on the site), then an application to the magistrates court for a liability order to seize and sell assets, and finally a prisonable offence for up to 3 months (although we’re guessing this is pretty rare).
So, there’s a lot to digest and it all sounds pretty officious, but we suggest it’s just a matter of understanding the running order and making sure you’ve submitted all your notices (and received all the acknowledgements) at the right time and keep the collecting authority informed of any changes en-route.
Above all, do not start on site until you’ve confirmed your proposed commencement of development date, otherwise you’ll lose any privileges you might have in the whole payment process. There are standard templates for the various notices and very detailed guidance to all things CIL available on the DCLG website.
Do let us know about your CIL experiences; we’re always keen to learn more.