Pilgrim's Progress: Publican delighted by win in complex CIL decision

Whilst to our client it may well have felt like they were living through each of the trials and tribulations in John Bunyan’s classic 1678 theological work, Pilgrim’s Progress, this is a modern, real life story of property development and an intransigent Local Planning Authority (LPA) determined to extract CIL on a project that was not actually liable.

On receiving the news that his CIL liability on the proposed redevelopment of his former pub, had been reduced from more than £22,000 to zero, a delighted Julian Mitchison, said “I would like to thank you and your team for getting our CIL liability reduced to zero. I was completely overwhelmed by the original demand, all I knew was that it was unjust. But I would never have been able to fight it without the expertise of you and your team and the considerable efforts you made on my behalf. The service you provided was exemplary. I have had occasion over the years to employ the services of some pretty heavyweight professionals in various fields - but none of them has been quite as impressive as yourselves. I can’t tell you what a relief it was to get your email”.

Community Infrastructure Levy (CIL)

CIL was introduced through the Planning Act 2008 (Part 11) initially to replace Section 106 contributions in planning permissions throughout England and Wales and fund vital infrastructure, such as roads, parks, schools and GP surgeries, etc. Coming into force in 2010, approximately 70% of Local Planning Authorities (LPA) across England & Wales have adopted CIL for their respective jurisdictions. These Regulations are very prescriptive and formulaic, but all of the discretion sits with the LPA to apply the rules as they see fit, whilst owners and developers have strict and limited routes to challenge, which are also time sensitive, so any procrastination could become expensive!

However, unlike Section 106 agreements, CIL is non-negotiable with applicants facing a calculated levy depending on the local authority’s own charging schedule – applying different rates across varying locations and the respective planning use(s). The most common development type affected by CIL is residential, but many councils also apply it other forms of property, including student accommodation, hotels, retail and offices.

Somerset County Council (SCC) adopted CIL with effect from 03 April 2017 – meaning all new planning permissions from this date would potentially be liable to CIL. The charging schedule for SCC set out two rates £40/m2 for residential developments and £100/m2 for various retail developments – with all other uses being £0 (zero)/m2 (including two specific zones for Yeovil and Chard also set at zero). CIL is calculated per square metre of additional floorspace and applies to new developments exceeding 100m2 or creating one or more new dwellings – meaning many homeowners building extensions should be exempt. Importantly, there are exemptions and reliefs available – such as for people building or extending their own home or affordable housing – however, these must be agreed with the LPA prior to work starting, as they are not automatically applied.

Project Background

An award-winning pub, Pilgrims Rest, in Somerset had sought planning permission for five new houses on the site after the publicans had decided to retire, having owned and operated the pub since January 1997. The owners were granted planning in December 2022. Somerset County Council (SCC) then issued a CIL Liability Notice in June 2023 for over £22,000 which threatened to derail the sale of the proposed redevelopment, after the pub originally closed in September 2019. The original plan was for the pub to close temporarily for six months with the intention of reopening in April 2020. As we all know now, the world was turned on its head in March 2020 by the Covid-19 pandemic, such that the pub never reopened.

Following the receipt of the Liability Notice from SCC, Julian contacted property taxation specialist, E³ Consulting, in early July 2023 to enquire if we could help to validate and/or reduce the CIL charges on their project. After reviewing the project details and planning permission, Alun Oliver, Managing Director of E³ Consulting was confident that E³ Consulting could help on this occasion and potentially reduce the CIL costs on the project, stating that “Having specialised in CIL since 2014, we were convinced that the position SCC took was incorrect, and had successfully argued many other lawful use cases”, further that “ultimately we were delighted that our CIL team were proven right in yet another successful Reg.114 Appeal”.

The legislation provides for several formal challenges, the starting point being to request a Review under Reg.113. This initial stage requires an independent person at the Council to reconsider the matter, pursuant to the request and evidence provided, albeit ‘marking their own homework’! E³ Consulting argued that the council had erred in not permitting offset (adjusting the chargeable area of the proposed development by the area of the existing property – measured as Gross Internal Area (GIA) – such that only new development floorspace is chargeable). Unfortunately, SCC as Charging Authority, concluded their ‘Review’ stating that they were correct, rejecting our position and maintained that the property was not in lawful use and so ineligible for the offset adjustment, retaining the £22,000 plus CIL charge.

Although time consuming, the Regulations then require those dissatisfied with the outcome of a Reg.113 Review to escalate to an Appeal with either the Valuation Office Agency (VOA) or Planning Inspectorate (PINS), depending on the nature of the Appeal. The VOA, an executive office under HM Revenue & Customs, are charged with undertaking independent determinations of Reg.114 Appeals for the calculation of the chargeable amount, the subject of this project. The Appeal request must be lodged within 60 days of the date of the Liability Notice and before any works are commenced.

E³ Consulting lodged the Appeal on 21 August 2023, again citing our opinion on why the property was in lawful use and thus the existing GIA should be offset from the proposed GIA. We brought in Graham Cridland, a planning solicitor based in Exeter, to support and corroborate our Appeal with the relevant planning law, including a number of precedent case decisions that supported the stance we had presented for the building to be in lawful use. Finally showing the net floorspace area after offset was negative, and thus CIL should be zero. Graham said “it was great collaborating with E³ Consulting on this complex case but the law, to us, was relatively clear and SCC really should have conceded the matter based upon the Reg.113 Review, saving the client the added cost and anguish of the 12 week Appeal period”. Still SCC maintained their position and argued the £22,000 charge was correct in their response to the VOA.

Decision

Whilst the requests for a Review or Appeal have strict time limits, after which one cannot formally challenge the CIL position, under the CIL Regulations the VOA has no time limits in reaching their decision. Our experience having progressed a number of appeals, ranges between seven weeks and twelve weeks to get a decision. Thankfully – and to our client’s clear relief, articulated above – the Appointed Person in their decision, released in November after twelve weeks, fully concurred with all of our technical points, accepted the precedent case law (two of which featured SCC and so should have been known to their CIL team) and decided in our favour reducing the CIL to zero. SCC were then forced to issue a new Liability Notice acknowledging the Appeal decision and reducing the CIL to zero, saving our clients over £22,000.