Community Infrastructure Levy: How to ensure that you can split payments

The recent case of The Queen on the application of Oval Estates (St Peter’s) Ltd and Bath & North East Somerset Council [2020] EWHC 457 (Admin) saw the High Court reject Oval Estates’ bid to avoid paying an entire CIL bill for a phased housing scheme in one go.

Phased payments under CIL Regulations

The Community Infrastructure Levy Regulations 2010 (the Regulations) prescribe the time when CIL is payable to a Charging Authority. The regulations state that CIL is payable on “Chargeable Developments” which are developments for which planning permission has been granted (Regulation 9). Crucially, if the development is constructed in one go then the CIL charge is payable on the whole of the development from the commencement of the chargeable development (Regulation 7). In contrast, if the development is phased, each phase constitutes a separate chargeable event. Developers should be aware that a phased planning permission is defined as one “which expressly provides for development to be carried out in phases” (Regulation 2(1)). 

Background of Oval Estates case

Oval Estates attempted to avoid paying CIL in one payment alleging their development of 81 residential dwellings in Somerset was a phased development. Oval’s argument was that they should only pay Bath and North East Somerset Council (“the Council”) CIL for the phases of development that had commenced.

Oval Estates were granted outline planning permission in March 2016 and in submitting their reserved matters application included a “proposed plan” that signalled the development would be constructed in three phases. Oval Estates obtained a non-material amendment (NMA) on 8 February 2019 to include a new plan in the Plans List to the 2016 permission. This indicated that the development would be in three phases. The Council maintained for the purposes of CIL that the development was not a phased development. Correspondence between the parties revealed Oval Estates assumed liability for CIL and they had submitted a Commencement Notice which indicated that development would commence on 15 October 2018.

Oval Estates argued that the 2016 planning permission, when read alongside the Section 106 Agreement, was a phased planning permission. Additionally, the “proposed plan” and NMA supported their stance. The Court held that there was nothing within the Section 106 Agreement implying the Development was phased. The Court also held while Oval Estates had signalled their intention to phase the development the description of the “proposed plan” indicated that the plan was not in agreed form, nor was it an indication that the 2016 planning permission was a phased planning permission.

Oval Estates sought to persuade the Court that their liability was modified by the NMA as the decision in effect made the 2016 planning permission a phased development. The Court emphasised that while Regulation 9(7) allows for the chargeable development date to be modified by minor material changes (s73 applications) the Regulations did not contain special rules in determining the chargeable development date where non-material amendments have been made.

Oval submitted that the material date for determining liability was the date the Liability Notice was issued to them, instead of the date on which “commencement of the chargeable development occurs” (Regulation 31(3)). The Court rejected this argument ruling the Liability Notice played no part in determining the liability date. The Court stressed the Notices served under the Regulations were influential in confirming when liability arose with the Commencement Notice affirming this was 15 October 2018.

The Court’s decision

The Court unanimously dismissed Oval Estates’ arguments and applied the Regulations rigidly. It was held liability to pay CIL arises on commencement of the chargeable development, which the Commencement Notice confirmed was 15 October 2018. Oval Estates were liable to pay the Council the sum of £874,283.78 in one payment.

What should developers take from Oval Estates?

The Court will apply the CIL Regulations strictly when a dispute arises.

When submitting planning applications, developers should make it clear to local planning authorities that the proposed development is to be phased. Supporting documents, e.g. plans and Section 106 Agreements, should be in agreed form and clearly set out the developer’s intention to phase the development. These should be incorporated into the planning permission at the outset.

TLT has significant experience of assisting developers at all stages of their development, including CIL. If you would like assistance, please contact us.

This publication is intended for general guidance and represents our understanding of the relevant law and practice as at March 2020. Specific advice should be sought for specific cases. For more information see our terms & conditions