December 14, 2021

Minimise a CIL payment where replacing an 'in-use' building

Planning law solicitors, Michael Harman and Ellie Mullins discuss triggers for Community Infrastructure Levy (CIL) and how in this example case, CIL was not due.

If a proposed development is built in replacement where the existing building is already ‘in-use’, one may avoid significant liability to pay a Community Infrastructure Levy (CIL). In this case, the issue was whether a building was “in use” for the purposes of the Community Infrastructure Levy Regulations 2010 (as amended) (CILR 2010); the CILR requiring use for not less than 6 months within the last 3 years.

Relevant Planning Law

Under Regulation 40(7) of the CIL Regulations 2010, a deduction of floorspace of certain existing buildings from the gross internal area of chargeable development to arrive at a net chargeable area upon where CIL will be required is allowed in certain circumstances. This includes where retained parts are ‘in-use buildings’.

Under Regulation 40(11) for a building to be an 'in-use building’, the building has to contain a part that has been in lawful use for a continuous period of at least 6 months within the period of three years ending on the day planning permission first permits the chargeable development.

Under Regulation 40(9), a Charging Authority (CA) may decide that there is insufficient information to certify that a building had been ‘in-use’ and therefore can decide that the gross internal area is zero and CIL is required. If this is the case, an Appellant can appeal this decision - as occurred in this case.

What are the facts?

The Appellant was granted planning permission to build four dwellings and erect a six-bay garage. The Appellant argued that he should not have to pay any CIL for his proposed development as the existing buildings had been ‘in-use’ for a mix of agricultural and domestic storage purposes. The Appellant’s main argument was that, because the floorspace proposed to be used/converted was already being used for domestic purposes, there was no additional development/floor space and hence no liability to pay CIL.

However, the Collecting Authority (CA) disagreed. They argued that the previous buildings had not been in use, as a matter of fact, for a continuous six months within the period of 3 years and therefore no eligible deduction could be made/no existing “in-use” credit applied. The CA highlighted that there had been no planning permissions granted to confirm the lawful use of the building for agricultural and domestic storage purposes.

The CA argued that the fact that the Appellant described the existing building as “conversion of a series of redundant agricultural buildings” was inconsistent with the Appellant’s claim that the building was “in-use” (per reg 40(11) CILR Regulations 2010. The CA also argued that the evidence of an electricity bill for the existing building was not sufficient evidence to prove that the building was ‘in-use’. Hence, the CA was saying that there is no entitlement to a discount/credit.

However, on appeal, an Inspector was satisfied that, although the Appellant’s wording could have been clearer, there was a building which satisfied the “in-use” test and hence a credit could be applied. Therefore, on these facts, the Appellant was not liable to pay CIL.

What next?

This case demonstrates the potential to mitigate a CIL liability where there is an “in-use” building to be put to a new use or re-developed. In many cases that credit can be worth a five or six-figure sum. It is therefore important that your right to claim/apply a potentially valuable CIL credit is not lost or overlooked. If this is an issue that you wish to learn more about, please do not hesitate to get in touch with Holmes & Hills team of specialist planning solicitors.

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