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COVID-19: Mitigating the impact of Community Infrastructure Levy (“CIL”) on stalled developments

The Coronavirus pandemic has led to construction sites being put on pause (though this has not been mandated), delaying development and pushing back when revenues might be generated to assist with making CIL payments.

The Community Infrastructure Levy Regulations 2010 (“the CIL Regs”) are relatively inflexible when it comes to non or delayed payment of CIL, which is unhelpful when retrofitting a mitigation strategy. Having said that there are some steps that can be taken, but the sooner this is done the better and almost necessarily pre commencement. Further, there may be tension between strategies for preventing a permission expiring through carrying out minor works (see our article on this topic), and not commencing development so as to avoid triggering CIL.

It is perhaps trite, but worth repeating, that full use should be made of any exemptions and reliefs provided for in the CIL Regs (see here for guidance on exemptions and reliefs generally). The ‘Exceptional Circumstances’ relief  is relatively rarely seen, but allows for relief where a development cannot afford to pay CIL. To be available an authority must adopt the relief, and few seem to have done so presumably to avoid adding to the debates that already go on regarding viability. However, now may be the time to encourage authorities to make the relief available, which will then apply when the authority consider that ‘paying the full levy would have an unacceptable impact on the development’s viability’ (and it is not state aid – see regulation 55 CIL Regs). This could be adopted on a temporary basis.

If no help is to be found in reliefs/exemptions, phasing as ever is the next best sticking plaster. The first question that needs to be asked is ‘do I have a phased permission?’. That according to the CIL Regs is a permission that is expressly phased, and the recent decision in Oval 

Estates  - see here for the judgement - provides insight as to the difficultly in inserting phasing post grant (and post commencement). That decision should be a guide as to the care that must be taken as not everything can be fixed using non material amendments and s106 agreements. However, a two step approach of ensuring that:

  • the permission is a phased permission; and
  • having a ‘Phase 0’ or infrastructure phase with all remaining development in a separate phase or phases

should mean that commencing development, which will preserve the permission, will only trigger CIL for ‘Phase 0’, which in turn should have a CIL liability of nil if only for infrastructure.

Outside of the CIL Regs, some authorities are voluntarily adopting strategies that seek to soften enforcement protocols to create some breathing space on payment dates, in the hope or expectation that in the near (ish) future sites will come back to life.

A good example is East Suffolk Council, which has set out its proposed CV19 actions for CIL here. These include adopting a case by case approach to collecting CIL; the reissuing of demand notices already issued to allow for a 3 month extension for the next payment (to be reviewed at the end of June 2020); adopting a case by case and pragmatic view on late payment interest and surcharges; and a pause on debt recovery for 3 months. 

Any measures that assist developments to stay viable, and during this holding period, are to be welcomed and encouraged. Kudos to those authorities that have been pro-active in foreseeing this issue and taking pragmatic and common sense steps to reflect what, we hope, will be a temporary pause in development. A similar softening of approach to planning enforcement generally is emerging – see our separate article on that very topic.

For more information on the article above please contact David Richardson or visit the Coronavirus/ COVID-19 area on our website.

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