Press enter to search, esc to close
The procedural intricacies of the community infrastructure levy (CIL) have come before the courts again, this time in relation to liability for surcharges for late payment.
The issue in London Borough of Lambeth v Secretary of State for Housing Communities and Local Government was whether the service of a revised Liability Notice or Demand Notice extinguished liability for a late payment surcharge which had already been incurred.
Regulation 85 of the Community Infrastructure Levy Regulations 2010 (the CIL Regulations) allows for the imposition of a surcharge for late payment of CIL. Regulation 85 provides that, where CIL is not received in full 30 days after the due date for payment, a surcharge equal to 5% of the sum due or £200 (whichever is greater) can be imposed.
LBL’s view was that liability for a late payment surcharge is:
The Secretary of State for Housing Communities and Local Government agreed with this, but Thornton Park contended that each time a new Demand Notice was issued, any previously issued Demand Notices ceased to have effect.
Regulation 69(5) states that ‘Where a collecting authority serves a demand notice on any person, any earlier demand notice served on that person in respect of the same chargeable development ceases to have effect.’ It followed, according to Thornton Park, that the Demand Notice issued on 10 December 2019 extinguished earlier Demand Notices and, therefore, LBL had to wait 30 days from that Demand Notice before it could demand a surcharge.
The court was clear that a purposive approach to the CIL Regulations was required. In dismissing Thornton Park’s appeal, the court described their interpretation as ‘circular’, as ‘Under its interpretation, the date when payment is due is determined by service of a Demand Notice. However, since a revised Demand Notice is required to be issued in response to the imposition of a late payment surcharge pursuant to Regulation 69(4) each new Demand Notice would reset the due date so that the power to impose late payment surcharges under Regulation 85(2) and (3) could never arise and is rendered meaningless. That, in turn, would be contrary to section 218 of the Act which requires the Regulations to make provision for the consequences of late payments and failure to pay.’
The court went on to say that it could not be the intention that past failures to pay CIL were extinguished on the issue of a new Demand Notice. This could result in developers avoiding late payment surcharges by transferring liability to another entity, or by applying for a non-material amendment, both of which require the issue of a revised Demand Notice.
Katherine Evans comments that “this is yet another case that demonstrates how important it is that developers keep track of what CIL payments are due and when they are due to ensure that they avoid surcharges. 5% of such a substantial CIL payment is a substantial sum itself so no doubt a judgement may have been made on whether the surcharge was less than the interest or other payments that might have been avoided in not paying this CIL payment on time”.
TLT has a wealth of experience in advising on CIL and other planning matters. If you would like to discuss your matter, please get in touch.
Contributor: Alexandra Holsgrove Jones
This publication is intended for general guidance and represents our understanding of the relevant law and practice as at June 2021. Specific advice should be sought for specific cases. For more information see our terms & conditions
23 June 2021