Self-builder stung with huge penalty for invalid CIL commencement notice

In Shropshire Council v SCLG [2019] EWHC 16 (Admin) (LexisNexis subscription required), the Planning Court upheld a massive community infrastructure levy (CIL) surcharge issued against a developer for beginning work without submitting a commencement notice, despite the issuing authority being aware of the date works were to begin.

The developer, a self-builder named Mr Jones, had applied for and received a self-build CIL exemption for the £36,861.43 obligation associated with a planning permission he’d obtained to build a detached home. Mr Jones emailed the issuing council informing them that clearance works would begin the next day, believing that doing so would comply with the requirement to submit a commencement notice the day before work began. The Council replied acknowledging receipt and stating that their records had been updated to reflect the email. Just over a month later, Mr Jones received a demand for £39,361.43 (the original CIL obligation plus a £2,500 surcharge for ‘invalid commencement’) claiming development had commenced without notice being provided.

The Community Infrastructure Levy Regulations 2010 currently set out strict procedural requirements for submitting a commencement notice: it must be submitted in writing on a form published by the Secretary of State (or a form to the same effect),  contain full details of the development, the person sending the notice and the person to whom it is being sent, and include a signed declaration. The email sent by Mr Jones was titled under the guise of an email relating to a s 106 payment, and had not fully laid out these details.

The court was unwavering in concluding that the e-mail did not constitute a valid commencement notice, finding that the inspector’s decision ‘verged on the irrational’. It upheld the Council’s penalty demand, on the basis that although the email fulfilled the statutory obligations for such a notice ‘in spirit’, it had not been in the exact form required by the CIL Regulations. Although it is difficult to see how the court could have concluded the case otherwise, the finding seems harsh for the self-builder in this case, who faced a huge financial penalty as a result of not complying with the statutory requirements in serving a notice telling the collecting authority of its intention to start works. The decision shows an unwillingness to depart from a narrow interpretation of the requirements, with no leeway given even to those who believe they are compliant.

The CIL Regulations are currently complicated to follow and it is not easy for self-builders to claim exemptions. Some of this complexity may be reduced following a recent government consultation on the CIL Regulations. Changes are proposed to the penalties associated with the failure to submit a commencement notice where CIL exemptions are being claimed, to ensure that a failure to submit a commencement notice does not result in the whole CIL liability becoming payable immediately. Instead, a surcharge equal to 20 per cent of the notional chargeable amount or £2,500, whichever is the lower amount, is proposed to apply.  However, there are a number of other strict and inflexible procedural requirements in the CIL Regulations which pose similarly severe penalties, which would remain unaddressed by the consultation proposals. For example, errors in the submission of exemption or relief claim forms can result in the applicant losing any such exemption or relief or transfers of assumed liability lacking particulars can result in the transferor remaining liable. The decision in Shropshire presents a stark reminder of the need for developers to strictly adhere to all procedural requirements under the CIL Regulations to avoid substantial penalties.

For more information on the community infrastructure levy, please see Overview-Community Infrastructure Levy (LexisNexis subscription required).