Community Infrastructure Levy - Case Study


The Planning Act 2008 introduced a planning charge known as the Community Infrastructure Levy (“CIL”).  On 6 April 2010 the Community Infrastructure Regulations 2010 (SI 2010/948) came into force and these regulations have since been amended.

CIL is essentially a charge on certain new developments and the funds raised are used by various authorities to help fund the development of infrastructure within their area. In the current climate, it has never been so important for local authorities to ensure they are maximising the recovery of this key debt.

Although the theory behind CIL was introduced back in 2008 and the regulations came into effect almost nine years ago, it is extremely new when compared to other local authority debt types. We are starting to see an increasing number of challenges faced by local authorities in collecting this debt type and below we provide a case study of the typical challenges faced and how Judge & Priestley Credit Solutions (J&P CS) assisted the authority to overcome them.

The Problem

The legal team at J&P CS were instructed on behalf of a local authority, which had developed good internal processes for the recovery of the Community Infrastructure Levy. Most developers they dealt with filed the required assumption of liability notices and commencement notices, making it easy for the local authority to know who to charge and when to raise demand notices.

In the case of one prolific developer, however, the local authority identified a consistent pattern. The developer had multiple developments running in the area at any one time. Although there was one principal company used by the developer, it became clear that there were a number of different companies set up to deal with the individual developments. All of these companies had the same registered director.  After planning permission had been granted for each development works, the council would issue the relevant liability notices, however, no assumption of liability notice was ever issued by either the developer, or the owner of the site. Further, despite works having started across most of the sites, no commencement notices were ever filed.

This left the council without a definitive idea as to whether works had commenced, triggering the CIL liability, or indeed who should be held liable for the CIL. The Council did its own investigatory work and determined that nine separate developments run by this developer had commenced and it duly raised demand notices. The Council then instructed us to seek to recover the sums owed. The total CIL and surcharge liability owed came to over £336,000, across the nine developments, and there were six different companies to pursue for this debt.

Our Solution

We provided the client with some initial advice about some of the demand notices and recommended in some of the cases to change the party to be held liable under the liability notices and to deliver new notices to updated addresses. Some of the companies had repeatedly changed their registered office address and some of the demands had been issued to old addresses.

We subsequently issued letters of demands, which served as reminder notices, to each of the companies, making it clear that our client would, if necessary, take legal action to recover the outstanding debt.

It was clear these were cases in large, where the companies had no real reason for not paying the sums owed. They were essentially delaying payment to the Council in order to assist with their short term cashflow issues. We engaged with the main director, who on some of the cases raised points of dispute. We were generally able to address these points objectively and we clearly set out the legal argument as to why the CIL debts and surcharges were both due and payable.

The Outcome

On six of the nine cases, we were able to deal with the relevant objections for payment and resolve the matters without the need for us to issue proceedings.

In three of the cases, the companies failed to pay, and with agreement from our client, we escalated the action by issuing magistrates court liability order proceedings. The aim was to be clear with the company and particularly the director, that the Council was extremely serious about recovering the sums owed.

The act of issuing proceedings made the director recognise the position the companies were in and we were able to resolve those further three cases without recourse to any further action.

Overall, out of the nine cases we were instructed on, all the matters were resolved to our client’s satisfaction. On one of the cases our client accepted that works had not yet commenced and as such the liability was withdrawn. In total we recovered over £309,000 for our client on these cases. More significantly, a clear message was sent to the developer that the Council would, where appropriate, be prepared to take the necessary pro-active steps to recover outstanding CIL payments.

Can we help you?

Taking action on cases such as this helps to change the future behaviour of developers such as this, who will think twice about delaying payments of CIL to the local authority, in order to help them manage their own cash flow issues.

Also, at a time when local authority spending is under constant strain, swift and robust action can help to bring in significant funds to the Council, which can be used to fund important infrastructure projects within the borough.

Our CIL service aims to supplement the good front end work your officers already do, to ensure the recovery of debt owed to the Council. If you would like to discuss how we can assist on any problem CIL cases you have, feel free to contact Rachel Addai, Partner and Head of CS Litigation, on 0208 290 7356.

Please contact us if you would like help with debt collection and credit control.

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