A developer who claims to have submitted a commencement notice to the council prior to starting its development has been ordered to pay a surcharge for late payment of the Community Infrastructure Levy (CIL). The developer claimed that it had sent the commencement notice to the council, as required by the Community Infrastructure Levy Regulations 2010 (the CIL Regulations). However, the council did not receive it.
Under the CIL Regulations, a developer must submit a commencement notice to the council no later than the day before the development is going to commence. When the council receives a commencement notice, it is obliged to send an acknowledgment of receipt to the person who submitted it. The receipt of the commencement notice by the council starts the 60 day period during which the CIL must be paid.
If a commencement notice is not submitted, the council has power to levy a surcharge. The council also determines the day on which the development was commenced (the 'deemed commencement date'). Payment of CIL is due in full on this deemed commencement date.
If payment of CIL is not made on the due date, the council can impose a surcharge and interest. A surcharge equal to the greater of 5% of the outstanding sum and £200 can be imposed where the CIL is not paid within 30 days of the due date. Further surcharges can be imposed if it remains outstanding after six months, and then again after 12 months.
In this case, although the council could have levied a surcharge of up to £2500 for failure to submit a commencement notice, it did not. However, it did impose a surcharge for late payment because the CIL had not been paid on the deemed commencement date. The developer objected to this. Its view was that it had complied with its obligations by submitting a commencement notice and should not be penalised for the notice going astray. However, no documentary evidence was available to demonstrate that the notice had been sent to the council so the surcharge was upheld.
It is surprising that it took the developer 11 months to question the procedure for paying the outstanding CIL. At that point the council became aware that development had commenced, set a deemed commencement date and issued a demand notice.
It is vital that strict attention is paid to the administrative procedures for paying CIL. Commencement notices should be sent by special delivery, or other means which enable you to prove that the notice was received by the council. If you do not receive an acknowledgment of receipt from the council within a reasonable time, contact them to check that the notice was received.
Failure to comply with the payment deadlines set out in the CIL Regulations could lead to a surcharge and interest for late payment. In certain circumstances, a stop notice can be issued. It is an offence to contravene a stop notice.
Contributor: Alexandra Holsgrove Jones
This publication is intended for general guidance and represents our understanding of the relevant law and practice as at September 2016. Specific advice should be sought for specific cases. For more information see our terms & conditions.