Greater flexibility for CIL

The Community Infrastructure Levy Regulations 2010, as amended ("CIL") are notoriously inflexible and strictly applied which often has devastating consequences for developers.  This is even more noticeable in times of financial difficulty as the UK is facing now.  The Government has this week introduced guidance encouraging charging authorities to be more flexible in their application of CIL especially for small and medium businesses ("SMEs").  

Instalment policies

Charging authorities have been encouraged to introduce an instalment policy for CIL or amend an existing instalment policy. This will provide a welcome relief for many SMEs who will now be able to spread out their CIL payments  although it will only benefit those developments that have not yet commenced or in a phased development, any un-commenced phases. 

 Enforcement

The Government guidance sets out its intention to introduce amendments to the CIL Regulations to permit deferral of CIL payments for SMEs.  The guidance reminds local authorities to use their discretion when considering enforcement action for any unpaid CIL.  Where a CIL liability is outstanding, a charging authority has the ability to serve a CIL stop notice requiring all works to stop until the CIL payment is made and/or issue surcharges for late payment.  These steps are not mandatory and charging authorities are encouraged to use their discretion when considering these draconian steps especially for SMEs where the financial burdens could result in the demise of these businesses. We may also see more scrutiny of charging authorities in the steps that they take to enforce CIL which is something to be encouraged.

Where a CIL payment is late, the CIL Regulations provide for mandatory late payment interest to be charged from the day after the payment becomes due.  Charging authorities have no discretion to dis-apply the accrual of late payment interest but the Government has promised to introduce regulations to dis-apply late payment interest for SMEs and provide a discretion to refund any late-payment interest already charged for developers with an annual turnover of less than £45 million.

 Way forward

We are already seeing charging authorities across the country take a pragmatic approach to the collection of CIL in these uncertain and difficult times.  This intention from the Government to introduce legislation to assist SMEs as well as the strong reminder for charging authorities to use their discretion when considering enforcement steps is a welcomed approach.  The devil will of course be in the detail of the regulations. It is also a timely reminder that developers must consider CIL planning and phasing as early as possible in the development cycle.