The case raised an important point about the calculation of the date when payment is due under the Community Infrastructure Levy Regulations 2010 and the operation of late-payment surcharge liability under regulation 85.
The Interested Party (“IP”) was a developer that assumed liability for a large chargeable development in Clapham. In the usual way, the Council issued a liability notice setting out the chargeable amount and a demand notice, notifying the IP that payment of CIL was due in two instalments.
The IP commenced the development but failed to pay the CIL instalments when they fell due. The outstanding CIL remained unpaid for a period of nearly a year, during which the IP submitted a non-material amendment to the scheme under section 96A of the 1990 Act. The non-material amendment resulted in a minor change to the chargeable amount, requiring the Council to issue revised liability and demand notices. When the Council issued the revised demand notice it also imposed 30 day and 6 month late payment surcharges for the IP’s outstanding failure to pay CIL.
The IP appealed against the imposition of the late payment surcharges, arguing that the Council were not entitled to impose late payment surcharges because insufficient time had elapsed following the service of the revised liability and demand notices, which, the IP claimed, cancelled the previous notices. The Inspector agreed that the date when payment was due should be calculated by reference to the revised demand notice and allowed the appeal on the basis that the Council had acted prematurely and had no legal power to impose the late payment surcharges.
The Council applied for judicial review of the Inspector’s decision on the basis that he had misinterpreted the CIL Regulations. The Secretary of State conceded that this was the case and that the claim should be allowed, but the IP maintained that its interpretation of the CIL Regulations, as accepted by the Inspector, was correct.
Allowing the claim, Thornton J. found that:
- The proper interpretation of the CIL Regulations did not support the IP’s argument that the date when payment is due should be calculated by reference to the date on which the last Demand Notice was served. A revised Liability or Demand Notice may reflect and record a change to the quantum of liability and/or payment dates but it does not itself change the genesis or origin of the liability. The date when payment is due for the purposes of the CIL Regulations is to be calculated in accordance with regulations 69B-71.
- It cannot be the intention of the CIL Regulations that past failures to pay CIL liability, which accrued upon commencement, should be capable of being expunged merely because some event has occurred requiring service of a revised Demand Notice, which would produce circular and perverse results.
A copy of the judgment is available here.