Community Infrastructure Levy and common pitfalls

We wrote last year on the need for applicants with Community Infrastructure Levy-liable development to be proactive in ensuring they obtain a CIL liability notice from their charging authority, and the costly consequences of failing to do so. Two recent decisions serve as a reminder of other common CIL pitfalls.

Floorspace credit for buildings in lawful use

CIL liability is calculated in accordance with a formula set out in the CIL Regulations 2010 which offsets the existing gross internal area (GIA) of “in-use buildings” against the GIA of your chargeable development – meaning you effectively get credit for “in-use buildings” and your CIL liability will be reduced accordingly.

An “in-use building” is defined as a “relevant building” which “contains a part that has been in lawful use for a continuous period of at least six months” within a particular three-year period. 

The Valuation Office Agency recently published a CIL appeal decision which turned on whether a building had been in lawful use. In this case, the charging authority served a CIL liability notice in connection with a retrospective planning application to provide holiday accommodation. The appellant argued that the application should not attract a CIL charge because it related to an “in-use building” and thus the existing GIA should be off-set. However, the previous use of the property as holiday accommodation was not lawful (evident by the need to obtain retrospective planning permission for the use). Therefore, there was no “in-use building” and the appellant could not benefit from any floorspace credit.

This is an important reminder to carefully consider the lawful uses of your site before applying for permission to avoid any surprises when it comes to CIL liability.

 “Commencement” includes demolition under the CIL Regulations

CIL is generally due either within 60 days of the “commencement date” or on “commencement” of development (per Regulations 70 and 71). This will depend on the precise circumstances and whether there is an instalment policy. It is therefore important to establish what constitutes “commencement” of development to avoid any surcharges for late payment of CIL. 

The Planning Inspectorate discussed the meaning of “commencement” in a recent appeal against a CIL demand notice.  The appellant had undertaken works of demolition without paying CIL and argued that there had been no “commencement” because demolition did not form part of the planning permission.  The Planning Inspectorate confirmed that this was not needed. “Commencement” for the purposes of CIL is to be construed in accordance with section 56 of the Town and Country Planning Act 1990 - which clearly states that “any works of demolition” are a “material operation” which constitutes commencement of development. The Planning Inspectorate further commented that it was irrelevant, for CIL purposes, whether such commencement was lawful in planning terms. Whilst the appeal was allowed on other grounds, the surcharges were upheld. 

Lessons to learn

Practitioners will not be surprised by either of the above decisions, but they are a reminder to applicants that the CIL Regulations are strict, with costly consequence for non-compliance.  

If you are applying for planning permission you should carefully consider from the outset whether such development is CIL liable and, if so, seek expert guidance if you are unsure whether your development will qualify for “in-use buildings” offsetting. 

Most importantly, applicants should not take into account that any material operation under their planning permission will trigger CIL liability.