Payments of Community Infrastructure Levy (“CIL”) During the Coronovirus (Covid-19) Period

Current position

The Community Infrastructure Levy Regulations 2010 (as amended) provide some flexibility for local authorities to defer the payment of CIL. The Government have published guidance that local authorities may wish to consider during the coronavirus (covid-19) period to provide further relief to developers. The current guidance/measures do not address issues such as, by way of example, compulsory interest due from developers for delayed payments of CIL.

The Government now wish to provide additional support to developers by empowering local authorities to have more discretion to defer CIL payments due and without having to impose further compulsory costs on such developers. Currently, the Government are aiming this additional support at smaller and medium sized developers only.

Payment of CIL in full?

In the absence of allowing those liable to pay CIL to do so in instalments, the entire CIL sum will be due within sixty (60) days from the relevant due date.

Local authorities can implement an instalments policy at any time which may include: (a) any number of instalments and (b) the relevant payment periods for such instalments. The issue is that any change in or a new instalments policy can only apply to developments commencing after the change or new instalments policy comes into effect. Any change in or new policy now will not assist current development projects. One point to note – where a development is being implemented in phases, the change in or a new instalments policy will apply to future phases of such phased development.

Late payment of CIL

Local authorities are to have more regard around how they deal with the late payment of CIL. A local authority has the power to: (a) prevent further development where CIL has not been paid and (b) impose a surcharge for non-payment of CIL, both of which are at the discretion of such local authority. The Government is encouraging local authorities to exercise this discretion more frequently and more widely. Contrast this position with that of interest. Interest for late CIL payments are not discretionary and are compulsorily imposed. The Government propose to change this compulsory element so that local authorities can impose such interest at their discretion.

The new proposed regulations will empower local authorities to:

  • defer CIL payments;
  • temporarily disapply late payment interest; and
  • provide a discretion to return interest already charged.

It is currently proposed that these additional powers will be temporary and only apply during the coronavirus (covid-19) period but this period may be extended to apply during any such further period of economic downturn.

Prior to the legal implementation of the new proposed regulations the Government are encouraging local authorities to now consider:

  • making use of the ability to change or introduce a new CIL instalments policy;
  • deferral of CIL payments;
  • disapply late payment interest on CIL payments due;
  • have wider regard when looking at enforcement action in respect of unpaid CIL liabilities; and
  • engage further and more widely with developers to minimise the impact of CIL liabilities.

What about Section 106 agreements?

The current section 106 agreements process already has greater flexibility than that of the current CIL process. The Government are encouraging local authorities to provide more flexibility for existing and when considering future section 106 agreements in terms of: (a) financial contributions and the timing for payment of such contributions and (b) the timing for other deliverables. Any new flexibility for existing section 106 agreements would need to be documented by a deed of variation.

The Government are also encouraging local authorities to have regard to the current coronavirus (covid-19) environment and the wider difficulties developers are facing when considering enforcement of existing section 106 agreements.

Simon Jones
Head of Real Estate
Email Simon
T: 020 7003 8124

Cannings ConnollyCannings Connolly
11 June 2020

Disclaimer:
This Legal Update is published as a general guide only and it is not intended to contain definitive legal or professional advice, which should be obtained as appropriate in relation to any particular matter. This publication relates to matters prevailing at the date of its original publication and may not have been updated to reflect subsequent developments.