CIL - Top Five Common Issues: Part 1

We set out in this article - the first of five - to highlight regular issues that we see on CIL projects across England & Wales, where Local Planning Authorities (LPAs) have adopted CIL

Elsewhere on our website (or social media), you will find much narrative from us on the Community Infrastructure Levy or CIL. It was introduced within the Planning Act 2008 and came into effect under the Community Infrastructure Levy Regulations 2010 (as amended) - via periodic updates from published statutory instruments.

CIL generates valuable funding for the LPAs to help deliver new schools, surgeries or public facilities such as play areas, bus routes, etc.

Initially CIL was expected to replace developers' contributions required via Section 106 of the Town & Country Planning Act 1990 (TCPA1990 s.106). However, over time CIL has ended up running alongside s.106 so LPAs now effectively have two bites of the cherry to help finance local infrastructure, necessitated by the scheme or project.

Once the respective LPA has adopted CIL, then any new planning permissions granted after the effective date become liable to CIL. Most impact residential planning permissions, although many LPAs also apply CIL to different uses including PBSA, Retail, Commercial Offices, Hotels and/or Industrial uses. The CIL rates can vary from use to use and some LPAs additionally have multiple zones across their geographic areas to help support priority schemes, or discourage certain uses by higher CIL rates.

So a new permission, adding new floor area would initially expect a CIL charge if granted after the adoption of CIL. Thereafter, there are exemptions or relief that can be claimed to reduce or entirely mitigate the CIL, depending upon the particular project circumstances (we'll be covering these in later editions of this short CIL series) but most of these must be applied for prior to commencement.

Once granted there is a potential CIL cost for the scheme, but does not formally become payable until triggered - by commencement of the project works under that permission - spade in the ground!

We have a great deal of dialogue with clients and advisers seeking to clarify what is commencement for CIL purposes. In short, it is aligned to the planning law and addressed by s.56 TCPA1990 that determines the 'Time when development begun' this is further set out within s.56(4) TCPA1990 as the start of 'Material Operations'.

Most importantly to us is the word 'any' that appears in most of the defined sub-paragraphs (a) to (e);

any work,
any operation or
any change start works

leaving digging of trenches for foundations or the laying of any underground main or pipe, foundation or a building within trenches, or lastly the laying out or constructing a road or part of a road.

Any of these work elements are arguably commencement - and thus potentially triggering the CIL Payment - if applicable.

Repairs and maintenance is not ordinarily commencement of the planning permission, as owners are able to maintain their properties in a reasonable condition, particularly if addressing storm damage and the like.

However caution is required where works are including within the 'proposed scheme' and cited in the planning application, design and access documentation as different to the 'existing property'. CIL is determined by reference to the approved drawings which set out the nature of the permission and if these works feature in the planning permission they may be used by the relevant LPA to argue that commencement has occurred.

Testing and exploratory bore holes etc. should not ordinarily be an issue so long as minimal and not expanded to pre-emptively begin wider works, such as digging trenches etc. for pipework or foundations that then stray into the realms of s.56(4) TCPA1990.

Further confusion can be avoided by not having too many planning permissions, or overlapping options. We have also seen issues arise from 'permitted development rights' that are being used in advance (or afterwards) of a wider planning permission. Again, the planning statement and drawings must carefully distinguish which is being done under which. Drawings and documentation should be bespoke to the actual position. Re-use of earlier drawings might be quicker and 'cheaper' but can also confuse the clarity of the respective permissions potentially leading to unexpected CIL costs.

Lastly, if you are purchasing a site with planning permission - do check whether, or not, any commencement has occurred under the relevant planning permission. Ensure the Local Land Searches have been carefully checked and consider if CIL specific wording may be necessary in the sale and purchase agreement to remedy any unexpected CIL arising from earlier actions of a prior owner.

Lastly, there are numerous CIL forms that must be submitted in the prescribed order to manage the communication with the LPA, not least (and most pertinent to this edition) Form 6 that advises the LPA of the intended date of commencement - that must be submitted and acknowledged before starting!

If you would like to discuss any property tax matters or specific queries relating to the above information, then please do contact the team on 0345 230 6450 or [email protected]. We look forward to speaking with you soon.