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COVID-19 CIL payment holiday policy

Background

  • The Ministry of Housing, Communities and Local Government (MHCLG) issued Coronavirus (COVID-19): Community Infrastructure Levy guidance on 13 May 2020.

    The government recognises that interest charges for the late payment of CIL are mandatory. To address this, the government wants to change the CIL regulations to give authorities more control to delay late payment interest for small and medium sized developers with an annual turnover of under £45m.

    This aims to prevent additional charges on this type of business. Timeframes have not been confirmed by the government for when these changes will be adopted or how long they will last.
  • The council’s COVID-19 CIL Payment Holiday Policy is designed to assist small to medium sized developers and individuals during the COVID-19 lockdown. This policy will apply to CIL payments due from the start of lockdown on 23 March 2020 and payments which fall due up to 30 June 2020.

    It does not apply to longstanding or late payments due before 23 March 2020 that remain outstanding.

CIL Regulations 2010 (as amended)

  • Payment period - under regulation 70 (7), the levy is payable in full within 60 days of the intended start date as set out in a commencement notice which complies with Regulation 67.

  • Instalment policies – Under Regulation 69B and 70, a charging authority can allow CIL to be payable by instalments. Tower Hamlets and Mayor of London’s Instalment Policy are identical and allow payments over £100,000 to be paid in two instalments. The first instalment is due 60 days following the start date and the second instalment is due 240 days after it starts. If an instalment is not paid on time, the instalment plan defaults and the outstanding amount is due immediately.

  • Surcharge for late payment – Under Regulation 85, if the payment is late by more than 30 days, the collecting authority may impose a surcharge of 5 per cent of the amount due or £200, whichever is the greater amount.

  • Late payment interest (LPI) – Under Regulation 87, interest is charged on the outstanding amount at 2.5 per cent above the Bank of England base rate from the day after payment became due.

  • CIL stop notices - Regulations 89-94 allow for a CIL Stop Notice to be served for non-payment. This is then withdrawn upon receipt of full payment but it is an offence to ignore a CIL Stop Notice and a fine is imposed based on the financial benefit gained through non-payment.

  • Magistrates’ courts - under regulations 102-104 a liability order can be obtained from a magistrates’ court for outstanding CIL payments.

CIL payment extension

  • In keeping with the spirit of the lockdown and with the agreement of the Mayor for London, the council acting as collecting authority, will suspend the requirement to pay the levy only if payment is due between 23 March and 30 June 2020. This also includes the payment of first or second instalments and the suspension of the need to pay the full amount if the first instalment is not paid on time. Payment will be expected on or by Wednesday 1 July 2020 and to be cleared into the council’s account by Friday 3 July.

  • Where a second instalment is due on or after 1 July 2020, payment will still be expected on the due date set 240 days after the start. A CIL Payment Holiday will therefore not be applicable to the second instalment and the existent instalment due date applies.

  • Levying surcharges for late payment will be suspended until 1 July. The issuing of CIL Stop Notices and council applications to the magistrates’ court will also be suspended until 1 July.

  • To ensure payment is made by 1 July 2020; late payment interest and a late payment surcharge will be imposed from the date CIL would have been otherwise due were this policy to not exist.

  • The COVID-19 CIL Payment Holiday Period may be extended if the lockdown continues beyond 1 July 2020 or if advised by the MHCLG. The council will issue a revised COVID-19 CIL Payment Holiday Policy if this arises.

  • Applications for relief and notifications of commencement should continue to be sent to the council via email to CIL@towerhamlets.gov.uk. The normal functions of the Infrastructure Planning Team are continuing and a surcharge for late notification of commencement will still apply and applications for any type of relief should still be sought and agreed before commencement.

Exclusions

  • In line with the MHCLG guidance of 13 May 2020, this policy will not apply to large development companies with an annual turnover of £45m or more. It also excludes companies that may have annual turnovers of less than £45m but are subsidiary companies owned or controlled by a parent or holding company with annual turnovers of £45m or more.

  • Any company or applicable parent company, whose registered address is not within the United Kingdom will not be covered under this policy. Any company or applicable parent company, whose registered address is within a British 5 Crown Dependency or British Overseas Territory, will not be covered under this policy.

  • Documentary evidence regarding a company and its associated parent companies, including but not limited to, most recent annual accounts and Companies House information, will need to be provided to demonstrate that a company is entitled to benefit from this policy. Any company that cannot provide this information to satisfy the above criteria will not be covered under this policy.

  • This policy cannot be applied to longstanding or late payments due before 23 March 2020 that remain outstanding (for example where construction is already complete) where late payment interest will still be charged during the COVID-19 CIL Payment holiday period.

Legal note

There is nothing in this policy which affects payment of CIL after 1 July 2020. This policy will be applied on a case by case basis and may not apply in certain circumstances at the council’s discretion.

The policy has been agreed by the Planning and Building Control Divisional Director and the Place Directorate Corporate Director in anticipation of an amendment to the CIL Regulations by the Ministry of Housing, Communities and Local government that allows for the temporary suspension of the relevant CIL Regulations mentioned above.

This policy may be subject to revision following the proposed amendment.