Stuart Tym, Planning Lawyer (Senior Associate Solicitor) at Irwin Mitchell LLP took the time to share his thoughts with Today’s Conveyancer regarding the amendment made to the Community Infrastructure Levy.
The Community Infrastructure Levy (Coronavirus) (Amendment) (England) Regulations 2020 had made their way to Parliament, with the draft published on 30 June 2020. They were proposed for approval on 14 July 2020 by the Housing Minister; so may be in force very soon. These Regulations will bring the long awaited CIL Deferral Scheme into effect, allowing small developers to negotiate extensions to CIL payments that have fallen due on implemented permissions. The draft guidance for local authorities has already been published.
To qualify, a developer will have to:
- have annual turnover not exceeding £45,000,000;
- have been served with a demand notice for a CIL payment
- be required to make that payment between the date that the regulations come into effect and 31 July 2021; and
- be experiencing financial difficulties for reasons connected to the effects of coronavirus that make it difficult to make the CIL payment on time.
If those tests are met, a developer can apply to the local authority and request that the CIL payment be deferred. The request can only be made up to 14 days in advance of the date on which the CIL payment falls due (or as soon possible afterwards). A Council has to consider the request as soon as practicable, and notify the developer of its decision within 40 days of receipt. If the deferral is granted, it can only be for a maximum period of six months from the date that the request has been received. Whilst a request is being considered, the Council is barred from levying any surcharges for the delay and late payment interest does not accrue.
If the request is refused, then the developer is given a further seven days from the date of refusal to make the payment before surcharges or interest can be levied. The regulations also include an ability for local authorities to waive or ‘credit’ late payment interest in respect of CIL payments for which deferral requests are made where this has already started to accrue.
Mayoral CIL can only be deferred if the Mayor of London consents to the deferral; which means that schemes in London may only be granted deferrals on Local CIL charges levied by the Borough.
The regulations do not set out the form in which applications should be made nor the evidence needed to support a request. The draft guidance does confirm that “it should be in writing” and that “applicants are encouraged to engage with the collecting authority at the earliest opportunity to discuss what relevant information they should provide, but as a minimum they should supply a copy of the relevant demand notice, and where there is likely to be any doubt, evidence that they’re turnover does not exceed £45 million and that they are experiencing financial difficulties as a result of the coronavirus”.
The guidance addresses the issue of the turnover threshold, stating: “If it is a sole enterprise it is the turnover of the applicant only, as shown in the latest set of accounts. For applicants acting as part of a group, that have partners or linked enterprises, the turnover assessment should take the latest turnover of the applicant, together with the turnover of any linked enterprises, any partners of any linked enterprises, any enterprises linked to any of the applicant’s partners and any enterprise linked to the applicant’s linked companies.”
It is also worth noting that:
- the scheme is discretionary, but the government expects collecting authorities to take a positive approach when considering a deferral request”.
- any concerns about eligibility should be raised early and additional information requested as soon as possible; and
- the same CIL payment can be deferred more than once.
The Regulations are welcomed and should provide assistance to many smaller developers; even if the jury is out on how effective this can be, with the turnover threshold set as it is, in getting the country building again.
