Planning ahead: Why adopting a CIL strategy and checking CIL liability is wise

28 / 04 / 2016

A useful High Court judgement regarding the calculation of Community Infrastructure Levy (“CIL”) was recently given in the case of Orbital Shopping Park Swindon Ltd, R (on the application of) v Swindon Borough Council & Anor [2016].

CIL is essentially a tax on development that results in increased floorspace, subject to certain exceptions. This case is a reminder of the complexities of the Community Infrastructure Levy Regulations 2010 (“the CIL Regulations”) and the need to take a strategic approach when submitting planning applications in order to reduce CIL liability. There remain minefields in the Regulations that can result in developers being
landed with hefty CIL demands, which can be avoided or at least reduced if a considered approach is taken.

The case related to the submission by the owners of a shopping centre in Swindon of two separate planning applications for development of a Next unit, one application being for the construction of a mezzanine floor, and the other for works to the exterior of the unit that involved no increase in floorspace.

Although the applications were linked, it was possible to implement the permission for the mezzanine floor space without implementing the permission for the external works or affecting the exterior of the unit.

Swindon Borough Council had issued a CIL liability notice for £170,900, but the shopping centre owners contested this, claiming that no CIL was payable.

Under Regulation 6(1)(c) of the CIL Regulations, CIL is not payable in respect of development that affects only the interior of a building. That extends to retail mezzanine floors for which planning permission is required where the resultant increase in floorspace exceeds 200 square metres (as in this case). CIL is also not payable in respect of external works where there is no resultant increase in floorspace. Accordingly, the owner submitted two separate applications on the basis that each would attract no CIL liability.

The Council claimed that the exterior works were inextricably linked to the mezzanine works and that it was entitled to treat the two applications as one. The combined development in that claimed scenario would involve works that affect the exterior and the interior of the building, so the Council’s case was that the exemption in Regulation 6(1)(c) would not apply and CIL should be payable.

The Court agreed with the shopping centre owners. The planning permissions were independent of each other and each development was not ‘chargeable development’ for CIL purposes. The dual application approach adopted by the owners was a legitimate one, even though it was a deliberate strategy to avoid any CIL liability.

Under the CIL Regulations, those liable to pay CIL may request a review of a CIL liability notice. It is not clear if the owners of the shopping centre did so in this case, but it is convenient to highlight the review and appeal provisions contained in the CIL Regulations as they can cause problems for the unwary.

When a CIL liability notice is issued, the Regulations allow for a request for a review to be made in writing, but the request must be made within 28 days. This is a very short time-period when considering the large sums of money at stake and the fact that a local authority’s CIL calculations can easily be wrong due to the complexities of the Regulations.

The CIL Regulations do allow for appeals to be made to an independent person, but only in cases where an application has first been made to the local authority to review its CIL calculation. Therefore, it is important not to assume that the authority’s CIL calculations are correct, and to challenge them without delay so that the ability to do so is not lost.