Potential Community Infrastructure Levy loophole

A potential Community Infrastructure Levy ("CIL") loophole has been exposed following the case of R (Orbital Shopping Park Swindon Ltd) v Swindon Borough Local Authority and another [2016] EWHC 448 (Admin).

CIL is a charge imposed by a Local Authority on landowners and developers for new buildings and developments which meet certain guidelines. The monies collected through CIL are used to fund local infrastructure, including roads, schools and public open space.

In the above case Orbital, the owner of a retail park, made two separate planning applications for a new mezzanine floor and external works in order to avoid the payment of CIL which would have been payable if one planning permission was made for both developments due to the increase in floor space caused by the mezzanine floor.

The Local Authority argued the planning permissions were inextricably linked, treated both planning applications as one and demanded CIL of £170,900 from Orbital. Following completion of the works, the Local Authority issued a CIL liability notice and a demand notice, which Orbital challenged in the High Court.

The High Court held that the Local Authority acted unlawfully in demanding CIL and held further that the legislation does not confer any right on a Local Authority to treat two applications as one. Orbital were entitled to take advantage of this loophole and had not acted illegally.

The outcome of this case is that owners and developers can split operational works in a development if this would avoid the payment of CIL.

The Court held that if this outcome was not what Parliament intended then they would need to draft further legislation to close the loophole and therefore legislation may be drafted in the future to close this loophole.

This article is for general guidance only. It provides useful information in a concise form. Action should not be taken without obtaining specific legal advice.