The case was a judicial review of an inspector’s dismissal of an appeal against late payment surcharges.  There were two grounds of challenge, both of which failed. First, that the Council (the charging and collecting authority) was not entitled under regulation 51(7)(a) to ‘withdraw’ social housing relief because of a failure to submit a commencement notice before the chargeable development commenced.  Secondly, that the date on which payment was due was the date on which the demand notice was issued, not the deemed commencement date. 

The Claimant applied for social housing relief on 8 May 2019.  This was granted on 14 May 2019.  At the time, regulation 51(7)(a) provided that a chargeable development ceased to be eligible for relief if a commencement notice was not submitted before the chargeable development commenced.  The relevant decision notice and liability notice both reiterated that requirement.  

On 19 June 2019, the Council identified that works had commenced without a commencement notice having been submitted.  Pursuant to regulation 68, the Council deemed the commencement date to be 19 June 2019.  A revised liability notice was then issued stating that the amount of social housing relief awarded was nil.  A demand notice was also issued stating that a £2,500 surcharge applied due to the failure to submit a commencement notice and that late payment surcharges could also be applied for late or non-payment.  A revised demand notice was later issued seeking two late payment surcharges and interest in addition to the full chargeable amount and the late payment surcharge.  In total, the failure to submit a commencement notice led to additional liability of around £470,000 in loss of social housing relief and surcharges.  

Lang J held that a purposive construction is to be applied to taxing legislation such as the CIL Regulations.  She held that the proper approach to statutory interpretation, as set out by the Supreme Court (R (Fylde Coast Farms Ltd) v Fylde Borough Council [2021] UKSC 18), requires the ‘provision to be set in its context as part of the relevant statutory framework, to have due regard to the historical context in which the relevant enactment came to be made, and to arrive at an interpretation which serves, rather than frustrates, the purpose of the particular provision’ ([66]).  

The Judge also recognised that the format and layout of the legislation can be used to construe a provision ([68]).  She accepted that official statements by government departments ([70]), as well as extrinsic material such as guidance and explanatory memoranda ([69]), along with background material ([71]), can also be useful tools for the Court. 

On ground 1, the Claimant argued that regulation 51(7)(a) only applied prior to the Council’s decision to grant social housing relief and that, once granted, relief could only be withdrawn if a disqualifying event falling within regulation 53 occurred.  The Defendant submitted that regulation 51(7)(a) was not confined to the period before the decision was made.  

Lang J held that the purpose of the ‘requirement to submit a commencement notice is a need for clarity’ as to when ‘chargeable development has commenced and liability to pay CIL is triggered’ ([77]).  Regulation 51(7)(a) furthered this purpose. 

Lang J had to decide what ‘eligible’ meant.  Although its precise meaning depends upon the context ([80]), in the context of regulation 51(7)(a), ‘its meaning is that the chargeable development ceases to fulfil the conditions for relief from liability to CIL, where a commencement notice is not submitted’ ([81]).  This was its ordinary meaning, read in its statutory context, and did not involve reading words into regulation 51(7) ([120]). The Claimant’s interpretation was therefore mistaken. 

The Judge held that nothing in regulation 51(7)(a) limited its operation to the period prior to the decision to grant relief and ‘it expressly includes the period before chargeable development commences’ ([88]). 

Lang J’s conclusion was reached before considering extrinsic material, which was used to identify the provision’s purpose and to confirm the ordinary meaning of the provision. 

The Judge held that it is the chargeable development, not the claimant, which is eligible for social housing relief and that, to interpret the regulation 51(6) deeming provision as creating a personal benefit which cannot be lost under regulation 51(7), would stretch the deeming provision beyond its purpose ([91]).  Lang J concluded that the Defendant’s interpretation of regulation 51(7)(a) was ‘broadly consistent with the statutory scheme for other exemptions and reliefs in the CIL Regulations’ ([94]) as well as the case law relating to the self-build housing exemption and regulation 54B(6) (Shropshire Council v SSCLG & Jones [2019] EWHC 16 (Admin), Gardiner v Hertsmere BC [2021] EWHC 1875 (Admin) and R (Trent) v Hertsmere BC [2021] EWHC 907 (Admin)).  

On ground 2, Lang J held that the deemed commencement date was the date upon which payment became due.  Payment did not become due on the date on which the demand notice was issued ([124]), as liability to pay CIL arises upon commencement of the chargeable development ([126]).  The date on which payment is due is merely stated in the demand notice; the demand notice does not set that date ([133]).  The argument that liability or demand notices determined the date and quantum of payments had correctly been rejected in Lambeth v Secretary of State for Housing, Communities and Local Government [2021] EWHC 1459 (Admin).  The decision in R (Trent) v Hertsmere Borough Council [2021] EWHC 907 (Admin) was held not to assist the Claimant as the argument that the demand notice, not regulation 71(2), set the date of payment was not raised in that case. 

Mrs Justice Lang refused the Claimant’s application for permission to appeal to the Court of Appeal.  

Richard Honey QC (leading Ben Du Feu) acted for the successful Defendant, instructed by the Government Legal Department.