Failure to abide by strict procedural requirements of CIL regulations can have severe financial penalties

In Shropshire Council v Secretary of State for the Communities and Local Government [2019] EWHC 16 (Admin) the High Court has confirmed that the Community Infrastructure Levy Regulations 2010 (the “CIL Regulations”) will be interpreted strictly and severe financial penalties may be imposed on those who deviate from the form precisely set out in the CIL Regulations.

The Community Infrastructure Levy ("CIL") is a planning charge introduced by Part 11 of the Planning Act 2008 which enables local authorities to levy a charge on developments for which planning consent is granted. The income from the charge is distributed within the local authority area at the various levels at which infrastructure improvements may be needed.

Each individual planning authority can decide whether to impose CIL and to determine the rate applicable from time to time, however, if the CIL is imposed, all other aspects of liability, collection and other administrative matters are governed by the Community Infrastructure Levy Regulations 2010 as amended ('the Regulations').

CIL is, in principle, chargeable on any development creating more than 100 square metres of additional floor space, as well as any newly built houses or flats. There are a number of important exemptions, including self-built houses.

In this case, the interested party was a self-builder, Mr Jones. He obtained planning permission to build a detached house in Shropshire. The CIL liability was assessed at £36,861.43 and he expected to benefit from the self-build CIL exemption. For this to apply, a Commencement Notice (under regulation 67) had to be issued to the council when work commenced.

A s.106 planning agreement was in place, which also obliged Mr Jones to inform the council when development was commencing, which in turn triggered a £9,000 payment to the Council.

The works were about to commence and Mr Jones sent an email on 11 July 2015 to that effect to the council as required under the s.106 agreement. The council acknowledged receipt of the email. Mr Jones did not, however, serve the Commencement Notice required for the CIL exemption.

On 13 August 2015, the Council issued a demand notice for £39,361.43 on the basis that development had commenced without a Commencement Notice being served pursuant to the CIL Regulations. The amount included the full amount of CIL and a surcharge for failing to serve the notice.

Mr Jones successfully appealed the notice. The Inspector agreed that his email to the planning team did constitute a CIL Commencement Notice. The Council challenged the Inspector's decision.

The High Court found in favour of the Council, stating that the CIL Regulations outline a prescribed statutory procedure. It confirmed that all procedural requirements must be adhered to. Applying the ordinary interpretation of the words, a notice that does not comply with timing or content required under statute will not be a notice under that statute. Mr Jones' email failed to meet the requirements of Regulation 67. Therefore, his commencement notice was held to be invalid; he lost the ability to claim the “self build exemption” and he was required to pay the full CIL bill and surcharge.

This case confirms that there is no flexibility when it comes to compliance with CIL regulatory requirements which can work for or against a developer’s interests.

In October 2018, the Government's consultation response recognised the "disproportionate impact of the penalties for failing to submit a Commencement Notice before development starts", and future legislation is expected to soften the impact of such fines. Nevertheless, developers should continue to abide by the strict procedural requirements of the CIL Regulations to avoid financial penalties.

Posted on 5 February, 2019 by Ortolan

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