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04th March 2020

Community Infrastructure Levy (CIL) – Is your development phased or will full liability arise on first commencement?

The Community Infrastructure Levy (CIL) is payable on commencement of a chargeable development. Importantly where planning permission authorises development in phases then each phase may be a separate chargeable development.
The payment of CIL for the development will then be spread across the development according to when each phase is commenced. But when is a development phased and what do you need to be careful of when phasing is intended so as to avoid full liability on commencement of the first phase of development? The High Court in Oval Estates (St Peter's) Ltd, R (On the Application Of) v Bath & North East Somerset Council [2020] EWHC 457 (Admin) has recently provided some useful guidance.

CIL Regs and Phased Planning Permissions

The Community Infrastructure Levy Regulations 2010 (“CIL Regs”) simply provide at regulation 9 that in the case of a grant of phased planning permission, each phase of the development is a separate chargeable development. A ”phased planning permission” being defined as "a planning permission which expressly provides for development to be carried out in phases".

But what does that mean in practice? In the Oval case, the developer runs several arguments to qualify their development as a phased planning permission. Though each argument was unsuccessful they do provide guidance on what is required for a development to qualify as a phased planning permission for the purposes of the CIL Regs.

Argument 1 – Relevance of S106 Agreement

Outline planning permission had been granted without any condition that the development be carried out in phases. No phasing conditions were imposed as part of the reserved matters approval. The first argument related to the section 106 agreement that had been entered into by the developer which required provision of affordable housing within the development and (it seems from the judgment) referred to approval of an affordable housing scheme as part of any approved phasing of construction. The Court found that such drafting referred to the possibility of phased construction but importantly did not require the planning permission to be implemented in phases. As such the section 106 agreement, in conjunction with the planning permission,did not give rise to a phased planning permission for the purposes of the CIL Regs.

Argument 2 – Difference between s96A & s73 amendments

The second argument related to a subsequent section 96A non-material amendment that was granted in relation to the planning permission by the council after commencement of development which introduced phasing through the substitution of plans. The developer contended that the CIL Regs should be applied to section 96A non-material amendments in the same way as section 73 permissions. Namely, Regulation 9(7) of the CIL Regs alters the commencement date of a chargeable development to that of the later section 73 permission. The Court rejected this argument and noted that such regulation only applies to section 73 permissions. Specifically the Court then noted:

Since that is so, there is no basis for a conclusion that where a change has been made under 96A any form of special rule applies for identifying the chargeable development. In this case liability to CIL in respect of the Development had already arisen when that development commenced on the 15 October 2018. That was in consequence of regulation 31. No part of regulation 9 of the 2010 Regulations suggests that liability either ceased to exist or was modified by the Council's decision on 8 February 2019 to allow the non-material change”.

Argument 3 – Relevance of s96A amendments

The final argument was that the material date for the purposes of determining liability for CIL is the date of the Liability Notice served under regulation 65 of the CIL Regs. In this case the date of the notice was 28 May 2019, after the date that authorisation for the s96A non-material change to the planning permission had been given. The Court also rejected this argument and noted:

It is clear to me that, as provided for in the 2010 Regulations, issue of the Liability Notice is not the event which triggers the obligation to pay CIL. Under the 2010 Regulations the function of the Liability Notice is to identify the liability to CIL that will arise, not liability that has already arisen. It is notable that the information prescribed by regulation 65 as information to be included in a Liability Notice does not include a statement of the date that liability to pay CIL arises

...

Regulation 31 of the 2010 Regulations is the operative provision. By the Assumption of Liability Form completed on 25 April 2017, Oval had assumed liability for payment of CIL. Having assumed liability to pay, the effect of regulation 31 was that when on 15 October 2018, work on the Development commenced Oval became liable to pay CIL in respect of the whole development. As at 15 October 2018, the chargeable development was the development permitted by the March 2016 planning permission. That planning permission was not a phased planning permission. The non-material change to the planning permission, subsequently authorised by the Council in February 2019, months after the commencement of work, did not alter the position.”. [emphasis added]

Lesson: The phasing of CIL payments can be very important to the cash flow and viability of a development, especially major developments. If it is intended at any time that a development will be phased then developers and landowners should ensure that such phasing is expressly required within the planning permission and its conditions and s106 obligations. If phasing is to be later introduced into an existing non-phased permission then it is important that such modification is achieved under a section 73 permission if commencement has already occurred. However, section 96A could be used to allow for phasing and phased CIL payments if the development has not already commenced.

For more information on any information raised in this article please contact Brendon Lee on 01223 532757 or click here to email Brendon.
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