An Inspector Calls - Planning Appeal decision

The Planning Inspectorate published a decision earlier this year in respect to a developer’s appeal against their Community Infrastructure Levy (CIL) liability. They decided an appeal on the dismissal of a self-build exemption for CIL on the basis that works had commenced before the decision had been made.

This decision provides a timely reminder of the importance of following the correct process in applying for CIL exemptions and highlights the risks of getting it wrong.

The Facts

The development comprised the erection of a two/three storey detached house, formation of vehicular access and provision of associated parking in the London Borough of Croydon.

Both the Local Planning Authority (LPA) and the developer accepted that the development was liable for CIL, but an exemption was applied for under s.54A Community Infrastructure Levy Regulations 2010 (as amended by Community Infrastructure Levy (Amendment) Regulations 2014), which introduced the exemption for self-build housing.  This provides an exemption from the payment of CIL for applicants building their own houses to live in.

The procedure to obtain this exemption is laid out in s.54B of the Regulations.  This includes having to fill in the relevant forms and submit them to the council at the correct time in the process.  The claim must be “received by the collecting authority before commencement of the chargeable development” as stated in s.54B(2)(b).  In this instance, the claim for self-build exemption was received by the council on 12 March 2015, and a Commencement Notice was submitted, stating that the work would start on site on 16 March 2015.

A further, and perhaps more crucial, condition in s.54B(3) is that “a claim [for self-build housing exemption] will lapse where the chargeable development to which it relates is commenced before the collecting authority has notified the claimant of its decision on the claim”.

Commencement

Part of the process for dealing with CIL is submitting a Commencement Notice, which states when the development will commence on site.  This is important, as commencement of the works generally leads to the CIL liability being fixed at the amount determined by the council at that point.  In other words, no appeal can be made against the CIL liability determined, or exemption or relief applied for, after the commencement of works on site.

For CIL purposes, development is treated under s.7(2) as beginning on the earliest date on which “material operation” is carried out.  “Material operation” has the same meaning as in s.56(4) of the Town and Country Planning Act 1990, and includes ‘any building works, demolition, digging of trenches for foundations or change in the use of land’.  Where a Commencement Notice is not submitted before work commences, the local authority can impose a surcharge of 20% of the total CIL value or £2,500, whichever is lower.

In this case, the Commencement Date was disputed.  The council claimed that the work commenced before the Commencement Notice and self-build exemption had been agreed, while the appellant asserted that the LPA was unreasonable in deeming the Commencement Date to be before the exemption was granted.

In support of its position, the LPA detailed several visits by planning and enforcement officers to the property between February and May, although they were unable to provide any supporting photographs and few details from these visits to the Inspector.  However, they also submitted photographs sent to them by an aggrieved neighbour, showing holes being dug, on 7 March.

In any case, there was no evidence that the Commencement Notice submitted by the appellant, which gave the commencement date as 16 March, was never properly withdrawn.  Therefore, the council could not have erred in treating this as the Commencement Notice when issuing their CIL Demand Notice as it would have been unreasonable to expect the CIL exemption to be decided within a few days of the application.

Conclusion

Although the decision is not surprising based on the legislation, it does demonstrate that LPAs are taking a hard line on the procedural aspects of any claims for relief or exemption from CIL.  The home owner in this case fitted squarely within the criteria envisaged by the legislation, and would have been supported by the policy concern underlying the introduction of self-build exemptions.  However, the CIL process is bureaucratic and inflexible when it comes to whether or not the relevant conditions for reliefs or exemptions are met and they are granted.  The key is to ensure that NO work starts on site before the CIL amount and any relevant exemptions have been completely agreed!

It also highlights the importance of good record keeping during the construction phase.  Had the home owner been able to present evidence that they had started works later, or that they had properly withdrawn their initial Commencement Notice, the outcome may have been different.

Although the published decision redacts the CIL amount payable, a 3-bedroom house with a 165m² floor area would incur a CIL liability of almost £20,000 at the applicable CIL rate in Croydon (including Mayoral CIL).  This could have been avoided had the home owner taken specialist advice at an early stage in the process.

E³ Consulting’s team has supported a number of self-build owners with the CIL process, to ensure they comply with the CIL requirements, and take advantage of any reliefs or exemptions in mitigating their liability.  We have successfully saved our clients hundreds of thousands of pounds of CIL, even where the client’s initial perception was that nothing could be done.

We work closely with architects and project managers to ensure their clients pay the correct CIL and liaise with the LPAs to ensure CIL is agreed at the correct amount and in a timely manner, so enabling site works to commence at the earliest opportunity, without triggering full CIL payment or penalties.

E³ Consulting operate from offices in Southampton and London and work with clients that own, operate or invest in property across the UK and overseas.  If you would like to discuss any aspects of this decision and its implications for you or your projects further, then please contact Alun Oliver or Ian Barwick for a no fee, no obligation initial discussion to see how we could help evaluate, evolve and enhance the available property tax savings from any property expenditure.

Contact us on healthcheck@e3consulting.co.uk or by telephone on 0345 230 6450.