Breaking News: CIL Deferral Regulations Published!
Yesterday was a big day for the development industry. With the PM's launch of Project Speed dominating the headlines, it would have been easy to miss the fact that the Community Infrastructure Levy (Coronavirus) (Amendment) (England) Regulations 2020 had finally made their way to parliament.
These are the Regulations that 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 Regulations need to be formally approved by parliament before they come into effect, but MHCLG appear to be fairly confident that this will happen relatively quickly - as the draft guidance for local authorities has already been published. The diagram at the bottom of this post comes from that guidance.
The process set out in the amending regulations seems relatively straight forward. 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, you will be able to 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 not payment 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.
Where you are dealing with both Local and Mayoral CIL payments, Mayoral CIL can only be deferred if the Mayor of London consents to the deferral; which means that schemes in London may well 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 is a little more helpful on this point, stating:
"The CIL Coronavirus Regulations do not prescribe a particular format for a deferral request, except it should be in writing and received no more than 14 days before or as soon as practicable after the date on which the CIL payment is due.....
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 have an turnover not exceeding £45 million and that they are experiencing financial difficulties as a result of the coronavirus"
The guidance also address the issue of the turnover threshold head on, 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, as shown in their accounts, 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 then goes on to describe what is meant by a sole enterprise, a partner or a linked enterprise and so on.
The guidance also makes clear that:
- the scheme is discretionary, so there is no right of appeal against a refusal 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, perhaps most importantly
- the same CIL payment can be deferred more than once.
The government is pushing coronavirus-related legislation through parliament at a rate of knots at present. The Business and Planning Bill is already through the House of Commons and on its way to the Lords. If that continues, the draft Community Infrastructure Levy (Coronavirus) (Amendment) (England) Regulations 2020 may not remain in draft for very much longer. In fact, they may be coming to a statute book near you very soon indeed!
This guidance will come into effect when the Community Infrastructure Levy (Coronavirus) (Amendment) (England) Regulations 2020 come into force and will remain in place until 31 July 2021, because the measures only apply to CIL payments that are payable on or after the date the instrument comes into force until 31 July. This guidance will be updated with a note to make clear when the regulations come into force.”
Key Contact
