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CIL life: UK government urges pragmatic approach to enforcing Community Infrastructure Levy and s106 obligations

Dinah Patel
19/05/2020

Locations

United Kingdom

On 13 May 2020, the UK's Ministry of Housing, Communities and Local Government (MHCLG) published guidance for local authorities on the Community Infrastructure Levy and the approach to existing section 106 agreements.

  Community Infrastructure Levy
 
Before the outbreak of COVID-19 in the UK, under the Community Infrastructure Levy Regulations 2010 (CIL Regs), there was some limited flexibility relating to the enforcement options charging authorities could pursue concerning late payment of a Community Infrastructure Levy (CIL).
 
Given the uncertainty, financial pressure and lost time developers face as a result of the COVID-19 lockdown, the government proposes to relax these enforcement options to ease the burden on small and medium-sized developers.
 
This includes amending the CIL Regs to permit local authorities to defer CIL payments, to disapply late payment interest and return interest payments already paid, where appropriate.
 
Until these amended regulations take effect, MHCLG's guidance is as follows:
 
  • CIL charging authorities are encouraged to consider making use of the ability to introduce an instalment policy (or amend an existing instalment policy);
  • Noting the government’s intention to introduce legislation to permit deferral of CIL payments and disapply late payment interest for small and medium-sized developers, CIL collecting authorities are encouraged to use discretion when considering what, if any, enforcement action is appropriate in respect of unpaid CIL liabilities;
  • CIL authorities should take a positive approach to engaging with SME developers, to ensure CIL liabilities do not cause undue burdens over the period of disruption caused by the coronavirus; and
  • CIL authorities should note existing flexibility they have around enforcing CIL for larger developers, including over the imposition of surcharges. Late payment interest will remain mandatory where this flexibility is used.
 
Section 106
 
The pandemic and associated lockdown may give rise to new issues regarding the performance of s106 obligations, which were previously deliverable within a timetable agreed prior to COVID-19.
 
MHCLG is encouraging local authorities to take a pragmatic view on enforcing s106 planning obligations in the current climate.
 
Specifically, where a financial obligation is due under a s106, MHCLG is encouraging local authorities to take a 'pragmatic and proportionate approach' in determining whether it would be appropriate to defer delivery of that obligation.
 
These agreed deferrals to developers' obligations can be facilitated using deeds of variation.
 
Given MHCLG's guidance, we recommend revisiting development programme timetables to see where schemes can benefit from the introduction of this new guidance.
 
Overall, these changes should encourage the continued development of sites and ease pressure on developers while they recover from the impact of COVID-19.
 
For more information, please see MHCLG's Coronavirus (COVID-19): Community Infrastructure Levy guidance. Fieldfisher will update its commentary once further guidance has been published.
 
If you have any queries, please get in touch with our expert planning director, Dinah Patel.
 
 

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