CIL - Do you know the procedures?
Alex Hicken, Managing Director of DHA, and Kate Jardine of Thomson Snell & Passmore consider the implications of the recent consultation on the CIL regulations, and what it might mean for self-builders and local authorities.
Self-builders have been urged to make sure they correctly complete the Community Infrastructure Levy (CIL) Regulations forms before commencing work on site, after a recent High Court case cost a self-builder nearly £40,000 in the loss of CIL exemptions.
A recent High Court decision in Shropshire Council v Secretary of State for the Communities and Local Government  EWHC 16, has highlighted the importance of understanding CIL forms and ensuring these are submitted precisely in the format set out in the CIL Regulations in order to avoid unnecessary penalties and surcharges.
In this case, a self-builder obtained planning permission from Shropshire Council to build a detached house with a triple garage. The Applicant had applied for and received a certificate from the Council confirming they had a self-build exemption from the assessed CIL liability of £36,861.34.
In order to fully benefit from the self-build exemption, pursuant to the CIL Regulations, the Applicant needed to complete a ‘Commencement Notice’ form, prior to starting the building works. The Applicant contended that he had sent an email to the Council in July which should have served as a valid commencement notice that the works would begin on site on July 11.
The following month, the Council sent the Applicant a demand notice, requiring immediate payment of the full amount of CIL, plus a surcharge of £2,500 on the basis that a valid commencement notice had not been served before the development started.
The Applicant successfully appealed the notice to which the Inspector agreed that this email constituted a CIL Commencement Notice. The Council subsequently challenged this decision.
The Court found in favour of the Council on the basis that the CIL Regulations outline a prescribed statutory procedure which the Applicant’s email failed to meet the requirements of. Therefore, the email was held not to be a valid commencement notice and the Applicant lost the ability to claim the “self-build exemption” and was instead required to pay the full CIL charge and surcharge.
The Judge stated that the Regulations made it perfectly clear that the consequence of failing to serve a valid commencement notice before work on a development starts is a loss of the exemption.
Kate Jardine, Senior Associate of Thomson Snell & Passmore in Tunbridge Wells, said: “We are increasingly seeing a number of cases where private developers are falling foul of the CIL Regulations and procedures which, as a result, can have severe financial consequences.
“Too often self-builders overlook the correct administration of the Commencement Notice. The failure to submit one prior to work getting under way means that the local authority has no discretion and is required by planning law to levy the full CIL contribution.
“The collated results of the consultation will be published in due course and government will decide what to do in response, hopefully some time later this year, and it is an issue that self-builders will need to keep a close eye on.”
With the recent consultation having just closed on the proposed amendments to CIL Regulations, many are hoping that what has often been termed as somewhat unjustified consequence of the failure to comply with the strict procedural requirements in the Regulations, will be loosened a little.
Alex Hicken, Managing Director DHA, said: “The recent CIL consultation proposed that the penalty for failure to serve a commencement notice before works are started will be a fine of £2,500 or 20% of the chargeable amount, whichever is the lesser and therefore avoid the scale of the charges in the Shropshire Council case being repeated.
“If approved this will obviously be a welcome proposal for many, if not all, significantly reducing the risk associated with missing those all-important deadlines.”
Collecting Authorities are able to impose a range of financial penalties when the liability, collection and/or payment processes outlined have not been followed correctly. In some cases, this can equal as much as 20 percent of the chargeable amount where development starts without the Authority having received a notice of chargeable development.
DHA and Thomson Snell & Passmore have provided an overview of the relevant process which should be read alongside the CIL Regulations (as amended) 2010. In summary, the collection process steps are as follows:
- Details of the proposed development must be submitted as set out in “CIL – Determining whether a development may be CIL Liability Planning Application Additional Information Requirement Form” and submitted via the Planning Portal – where this relates to a Charging Authority, the application will be deemed “invalid” without this.
- If the development is eligible for relief, we would recommend that exemption forms are submitted alongside the Additional Requirement Form. Relief can be claimed at any point between the submission of the application and commencement of the development. The exemption forms are listed below, and submission of the forms will depend on the nature of the development:
- Form 2: Claiming exemption of relief
- Form 7: Part 1 self-build exemption claim form;
- Form 8: Self-build residential annex exemption claim form; or
- Form 9: Self-build residential extension claim form.
- Where planning permission is not required but the development is nonetheless CIL liable (i.e. permitted development), the developer should submit “Form 5: Notice of Chargeable Development form”. Where an Authority does not receive a notice of chargeable development but is aware that development has started, the Collecting Authority will prepare a notice themselves and serve it on each person known to the Authority as owner of the land.
- Where planning permission is granted for development by way of a general consent, a notice of chargeable development from the developer or landowner will be issued by the Authority (unless the development is less than 100 square metres, or the chargeable amount is zero);
- Where planning permission has been granted, the developer should submit “Form 1: Assumption of Liability” – this should be completed by the developer, landowner or another interested party.
- The Collecting Authority will issue a liability notice to the developer which sets out the charge due and details of the payment procedure;
- The developer (or relevant person(s)) may assume liability to pay and should then submit “Form 6: Commencement Notice” – setting out when the development is going to start;
- The Collecting Authority will issue a demand notice to the developer, which sets out the payment due dates in line with the payment procedure;
- It is then expected that on commencement of the development, the developer would follow the correct payment procedure; the Collecting Authority will not send reminders about deadlines;
- The Collecting Authority will issue a receipt for each payment received.
All of the relevant CIL forms are available for download on the Planning Portal.
If you require further advice on compliance with the CIL Regulations or CIL procedures please contact Alex Hicken or Danielle Ingleston at DHA or Kate Jardine at Thomson Snell & Passmore.