Local authorities and developers should take note of a recent High Court case in which Hertsmere Borough Council was prevented from recovering any Community Infrastructure Levy (CIL) in respect of a chargeable development because its liability notice was issued too late. R (Trent) v Hertsmere Borough Council [2021] EWHC 907 (Admin) sets an important precedent in relation to a collecting authority’s obligation under regulation 65(1) of the CIL Regulations 2010 to issue a liability notice ‘as soon as reasonably practicable after the day on which a planning permission first permits development’, and the consequences of failing to do so.

The facts 

This case relates to a claimant home owner’s application for judicial review of Hertsmere Borough Council’s decision to issue a CIL demand notice in April 2020.

Planning permission for a self-build residential development had been granted by the Council on 5 February 2017. In subsequent proceedings the Council claimed that shortly afterwards a CIL liability notice for the amount of £16,389.75 was issued by email, of which the claimant denied receipt. Construction of the development then commenced in August 2017, with no commencement notice having been issued because the claimant thought that they had the benefit of the self-build exemption and did not realise that a commencement notice was required. The Council, upon realising that commencement had occurred, issued a liability notice, a demand notice and surcharges in June 2019, almost two and a half years after permission had been granted.

The claimant successfully appealed against the demand notice and surcharges, with a Planning Inspector finding that:

• the 2017 liability notice had not been served on the evidence available; and
• the 2019 liability notice was not valid because it did not meet the requirement to have been served as soon as reasonably practicable after the grant of planning permission in accordance with regulation 65(1) CIL Regulations.

The Inspector had no power to quash the 2019 liability notice and his decision was limited to the surcharge appeal under regulation 117 and the demand notice appeal under regulation 118.

Despite the Inspector’s findings, the Council proceeded to issue an additional demand notice to the claimant in April 2020, on the basis that the 2019 liability notice had been validly served. The claimant submitted that, in light of the Inspector’s decision, the decision to issue the 2020 demand notice was unlawful and in breach of the claimant’s human rights.

The decision of the High Court

Mrs Justice Lang found in favour of the claimant and allowed the claim.

The Council was required to issue and serve statutory notices in compliance with the CIL Regulations “in the prescribed sequence”. Only then would the claimant be under an obligation to pay the CIL as required in the 2020 demand notice. It is apparent from regulation 69 of the CIL Regulations that a demand notice can only be issued after a valid liability notice. This is because the demand notice must identify the liability notice to which it relates.

Lang J agreed with the Inspector that, on the balance of probabilities, the 2017 liability notice was neither issued nor served.

In relation to the 2019 liability notice, Lang J agreed with the Inspector that the length of time between the grant of permission and issuing of the liability notice meant that it was not in accordance with the wording of regulation 65(1). Her judgment noted that regulation 65(1) “imposes a mandatory requirement without any provision for extensions of time… I consider that the absence of any provision for extensions of time was deliberate, to ensure that authorities comply with the duty in a timely way.” It was considered that the failure to serve a valid liability notice on the claimant within the prescribed time period was prejudicial, and both the 2019 liability notice and 2020 demand notice were quashed.

The judgment also suggested that a reasonable Council ought to have had regard to the Inspector's findings when deciding upon its next steps in such circumstances.

Key practice points

This case serves as an important lesson for local authorities, confirming that service of a liability notice can be prevented by a significant delay. Whether a notice has been served as soon as reasonably practicable will be a matter of judgment to be decided on a case by case basis. The facts of this case are unusual, with the relevant period of delay being particularly extreme. We can no doubt expect further cases dealing with this issue, providing further clarity on what lengths of delay might fall foul of regulation 65(1).

However, we would caution developers against relying on this case in order to commence a chargeable development without having received a liability notice. Failure to follow the prescribed sequence for CIL creates complex issues that are difficult to resolve in the context of a notoriously rigid and punitive regime.

This case is also yet another reminder to ensure that delivery of CIL notices can be evidenced. It is best practice to require confirmation of receipt where sending notices by email.

For practical CIL tips and further commentary on related case law, you can watch our on demand webinar Community Infrastructure Levy: Avoiding Common Pitfalls, recorded in September 2020 – click here to see our 2020 Planning and Compulsory Purchase 2020 webinar series and view the 2021 schedule.

Co-written by Kayla Urbanski, Trainee Solicitor