Developers will be aware of the intricacies and complexities contained in the Community Infrastructure Levy (“CIL”) regime: with charges as high as £500/m2 in some parts of the country, one wrong step or mis-application of the law (which is generally described as complicated and inflexible) could result in a big financial penalty.
The High Court has recently determined a case relating to the application of interest on the late payment of CIL. In the case of R on the Application of the London Borough of Lambeth v Secretary of State for Housing, Communities and Local Government [2021] EWHC 1459 (Admin), a late payment surcharge of £465,617 was upheld.
In this particular case, the Council had issued various CIL Liability and Demand Notices taking into account a variation of the planning permission. Those variations resulted in changes to the gross internal area and therefore changes to the amount of CIL payable. The developer had not paid the initial Demand Notice within 30 days, giving the Council the opportunity to apply a surcharge of 5%.
The surcharge was re-imposed on subsequent Demand Notices issued and ultimately appealed to the Planning Inspectorate. The developer argued that only the final Demand Notice should apply and any surcharge should only arise if that had not been paid within 30 days (which they had done). The Inspector agreed with the developer and found that new Demand Notices essentially override old.
The Council challenged the Inspector’s decision to the High Court and won, confirming that the surcharge should apply. The High Court held that the Demand Notices did not have the effect of overriding the previous surcharges applied; and this would be an unsatisfactory effect of the CIL regime.
The CIL regime is notoriously inflexible and should be followed to the letter to avoid late payment interest and surcharges which can be substantial and unexpected. The lesson reinforced by this case is to ensure that CIL is paid in a timely manner, or to consider appealing if the figures are not agreed (subject to there being a legal basis for non-agreement).
If you are looking for advice on CIL or similar planning matters, please do get in touch.