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CIL – false starts can be punishing

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Community Infrastructure Levy liability is determined by the point at which development is notified or deemed to have commenced. The point at which that actually occurs is not crystal clear and a recent Planning Inspectorate decision suggests that care is needed by collecting authorities and developers.  At the moment there is a risk that a planning permission that has not been implemented for planning purposes (and which could, indeed, lapse for a failure to start in time) has been implemented for CIL purposes creating a CIL liability.

CIL Triggers

CIL liability is not triggered by a material start: it is triggered by the date given in a commencement notice (unless the notice is withdrawn in advance) or, in the absence of advance notice, the deeming of a commencement date by the collecting authority.

A material start without serving a commencement notice means that CIL liability is accelerated (losing instalment and other deferral benefits) and inflated (losing some reliefs).

What constitutes a material start for CIL purposes can therefore be a million dollar question.

False Starts

The CIL Regulations require the chargeable development to have been commenced:

  • that means (under reg.7(2)) the date “any material operation begins to be carried out
  • material operation has the same meaning as under Section 56(4) TCPA 1990. Care is needed, because the Courts have confirmed that the list in Section 56(4) is not exclusive – other operations could therefore trigger CIL where material
  • reg.7 does not refer to Section 56(2), which is clear that for the purposes of meeting time limit conditions, material operations have to be “comprised in the development”. Nonetheless, the Regulations are clear elsewhere that it is the chargeable development that must be commenced.

For time-limit purposes, the law is clear that operations done without discharging genuine pre-commencement conditions are not referable to the relevant planning permission (FG Whitley & Sons v SoS Wales(1992) 64 P & CR 296: “if the operations […] contravene the conditions, that cannot be properly described as commencing the development authorised by the permission“). The operations are unlawful and at risk of enforcement, unless recognised exceptions apply.

Logic suggests that the same legal authority – and outcome – should apply to early starts for CIL purposes. CIL should not be triggered but there may be enforcement consequences and CIL consequences associated with any use of retrospective permission under Section 73A TCPA 1990.

Inspectorate disagree

CIL practice and logic have been bad bedfellows. In a recent CIL appeal decision, the Planning Inspectorate was asked to determine the correct deemed commencement date where development began without complying with a pre-commencement (noise protection) condition.  The appellant claimed that the development was not referable to the planning permission and so not chargeable. The authority contended – probably rightly – that the condition was not a genuine pre-commencement condition for Whitley purposes. The Inspector took a more purposive approach, finding that:

  • The CIL regime is not concerned with whether or not a development is lawful, it is only concerned with whether it has commenced.
  • The date of commencement of development is a separate matter from the date upon which development could be said to be authorised.

It is not the first decision to adopt this approach (also applied on appeal in 2014). Then again, two wrongs do not make a right.

Common Sense?

Care is needed by developers and reliance on the Whitley principle is risky, not least because at one level the relevant law is about the extent to which enforcement would be perverse.  The other side of the coin is that some of the findings noted above are arguably perverse: the CIL regime is (explicitly) concerned with the question of whether the chargeable development has been commenced. If the Courts would not recognise commencement for planning purposes in reliance on the chargeable permission – and would instead uphold enforcement – it follows that the ‘date for commencement of development’ is not a separate matter from the point at which that commencement could properly be said to be lawful.

The two appeal decisions do not, in that sense, recognise that:

  • the Regulations require a different approach: although reg.7(2) does not require the commencement to be referable to the chargeable permission, every other part of the Regulations that relies on reg.7(2) does so clearly.
  • this avoids otherwise perverse outcomes: for example:
    (1) service of CIL stop notice (for development taking place under the chargeable permission) where an enforcement notice could be served against development being treated as unauthorised by that permission;
    (2) CIL payment being required despite the Courts determining that the permission itself has not been implemented and so has lapsed.

In the application of Planning law, common sense tends to rise to the top, eventually. There is no reason why the CIL regime should be interpreted in any less sensible way but until there is clarity through further reform or guidance on this point, care is needed.