The Ombudsman's final decision:
Summary: Mr X complains the Council was wrong to withdraw a Community Infrastructure Levy (CIL) exemption in respect of an extension to his home. He complains the Council failed to take account of the law and as a result the Council wrongly charged him a CIL levy of £27,124.20 which it should now refund. We found the Council was not at fault.
- Mr X complains the Council was wrong to withdraw a Community Infrastructure Levy (CIL) exemption in respect of an extension to his home. He complains the Council failed to take account of the law and as a result the Council wrongly charged him a CIL levy of £27,124.20 which it should now refund.
The Ombudsman’s role and powers
- We investigate complaints of injustice caused by ‘maladministration’ and ‘service failure’. I have used the word ‘fault’ to refer to these. We cannot question whether a council’s decision is right or wrong simply because the complainant disagrees with it. We must consider whether there was fault in the way the decision was reached. (Local Government Act 1974, section 34(3), as amended)
- If we are satisfied with a council’s actions or proposed actions, we can complete our investigation and issue a decision statement. (Local Government Act 1974, section 30(1B) and 34H(i), as amended)
How I considered this complaint
- I contacted Mr X and considered the information he provided about his complaint. I made the Council aware of the complaint.
- I took legal advice about the Community Infrastructure Regulations 2010 (as amended) which is central to Mr X’s complaint and I considered that advice.
- I sent both parties my draft decision to enable them to comment before I made a final decision.
What I found
- At the time that Mr X’s development was approved in 2016, the regulations (relevant to Mr X’s complaint) stated;
- [42A Exemption for residential annexes or extensions]
[(1) Subject to paragraphs (5) and (6), a person (P) is exempt from liability to pay CIL in respect of development if—
(a) P owns a material interest in a dwelling (“main dwelling”);
(b) P occupies the main dwelling as P's sole or main residence; and
(c) the development is a residential annex or a residential extension.
- [42B Exemption for residential annexes or extensions: procedure]
[(1) A person who wishes to benefit from the exemption for residential annexes or extensions must submit a claim to the collecting authority in accordance with this regulation.
(2) The claim must—
(a) be received by the collecting authority before commencement of the chargeable development;
(b) be submitted to the collecting authority in writing on a form published by the Secretary of State (or a form substantially to the same effect);
(c) include the particulars specified or referred to in the form; and
(d) be accompanied by the documents specified or referred to in the form.
(3) A claim under this regulation will lapse where the chargeable development to which it relates is commenced before the collecting authority has notified the claimant of its decision on the claim.
(4) As soon as practicable after receiving a valid claim, and subject to regulation 42A(5), the collecting authority must grant the exemption and notify the claimant in writing of the exemption granted (or the amount of relief granted, as the case may be).
(5) A claim for an exemption for residential annexes or extensions is valid if it complies with the requirements of paragraph (2).
(6) A person who is granted an exemption for residential annexes or residential extensions ceases to be eligible for that exemption if a commencement notice is not submitted to the collecting authority before the day the chargeable development is commenced.]
- 67 Commencement notice
(1) Where planning permission is granted for a chargeable development, a commencement notice must be submitted to the collecting authority no later than the day before the day on which the chargeable development is to be commenced.
[(1A) This regulation does not apply to a development—
(a) to which regulation 42 applies; . . .
[(aa) in relation to which no CIL is payable because an exemption for residential extensions was granted; or]
(b) in relation to which the chargeable amount, calculated under regulation 40, is zero.]
- I have referred to the Community Infrastructure Levy Regulations 2010 (as amended) as ‘the regulations’ in this statement.
- Community Infrastructure Levy is payable on developments with a floor area of 100 square metres or more. However, the regulations set out some exemptions from paying the Levy.
- The Council granted planning permission for Mr X to build an extension to his home in 2016. Mr X’s development was over 100 square metres. However, in June 2016, the Council confirmed, because Mr X’s development was an extension to his existing property, he qualified for an exemption from CIL under section 42(A) of the regulations.
- The Council’s correspondence with Mr X stated that before starting the development he needed to submit a Commencement Notice.
- It is not disputed that Mr X started work on his extension on 6 February 2017 without first submitting a commencement notice to the Council. The Council’s subsequent correspondence with Mr X about the issue suggests this was an oversight by Mr X or his planning agent.
- The Council visited the site and noted work had started. As the Council had not received a commencement notice the Council withdrew Mr X’s exemption. As a result of the removal of the exemption, the Council told Mr X he would need to pay a CIL charge of £27,124.20. As allowed by the regulations the Council also added a surcharge of £2,500.
- Mr X made representations to the Council and asked it to reconsider its decision. In April the Council agreed to waive the surcharge, but it required the CIL of £27,124.20 to be paid in full. The Council cited paragraph 42(B)(6) of the regulations which required a commencement notice to be submitted, to avoid the loss of an exemption.
- Mr X explained he felt compelled to pay the CIL charge to avoid the Council placing a stop on the completion of the works. He paid the charge in full.
- However, in 2018 Mr X became aware of revised planning guidance the government had issued in March 2018. He also became aware of a letter the Secretary of State wrote to an MP about a similar case to Mr X’s in April 2018.
- The revisions to government guidance from March 2018 highlight paragraph 67(1A)(aa) of the regulations which was inserted in 2014. That paragraph states clearly that commencement notices do not apply to extensions. The Secretary of State’s correspondence with the MP stated the government had not intended the commencement notice requirements to apply to extensions.
- When Mr X became aware of the guidance, he complained to the Council via his MP. He noted the law had changed in 2014 (to insert paragraph 67(1A)(aa)), before the Council reached its decision on his case. Because paragraph 67(1A)(aa)) stated commencement notices should not apply to extensions when the Council took its decision, he asked the Council to refund the CIL he had paid.
- When the Council responded to Mr X’s complaint in April 2017, it stated that Mr X and his agent had been advised of the need to submit a commencement notice before he started work. It stated that the Council had a duty to collect CIL and it referred to paragraph 42(B)(6) which stated a commencement notice must be issued. Its letter included an out of date paragraph 67 (the version of the regulations prior to amendment in 2014).
- Mr X complained that the Council’s response had failed to properly consider paragraph 67(1A)(aa), and the regulations as they stood at the time of its decision in 2016.
- The Council’s final response to Mr X’s complaint stated officers had not overlooked paragraph 61(1A)(aa). The Council stated officers disagreed that paragraph 61(1A)(aa) explained or qualified paragraph 42(B). The Council stated the officers’ decision in 2017 was that paragraphs 42(A) and 42(B) were pre-eminent.
- The Council noted that officers took account of government planning practice guidance when taking their decision. At the time officers reached the decision to withdraw the exemption in 2017, the guidance did not make clear which of paragraphs 42(B)(6) or paragraph 67(1A)(aa) took precedence.
- In 2017 the planning guidance on the regulations stated:
- Paragraph 150 “In order to benefit from the exemption, the applicant must submit a commencement notice to the authority before starting work on site. Paragraph 150, Reference ID:25-150-20140612 Revision date: 12 06 2014
- Paragraph 153 “Regulations 42A, 42B and 42C (inserted by the 2014 regulations) set out the legislative provisions for residential extensions and annexes.” Paragraph: 153 Reference ID: 25-153-20140612 Revision date: 12 06 201426.
- Paragraph 150 of government guidance from March 2018 states “In order to benefit from an exemption, the applicant for a residential annex exemption must submit a commencement notice to the authority before starting work on site. This requirement does not apply in regard to a residential extension exemption as set out at in regulation 67(1A). Paragraph: 150 Reference ID: 25-150-20180222 Revision date: 22 02 2018
- Paragraph 153 after March 2018 stated “Regulations 42A, 42B and 42C (inserted by the 2014 Regulations) set out the legislative provisions for residential extensions and annexes. Regulation 67(1A) sets out that requirements for Commencement Notices do not apply to exemptions for residential extensions.” Paragraph: 153 Reference ID: 25-153-20180222 Revision date: 22 02 2018
What should have happened
- My role is to consider whether the Council was at fault when it reached the decisions it did in Mr X’s case. In doing I have considered what the regulations stated and what government guidance existed at the time of this decision in 2017.
- The Council decided to remove the exemption and apply the CIL charge to Mr X, because he had not submitted a commencement notice before starting work. It is undisputed that Mr X did not submit a commencement notice. However, Mr X says he now believes he did not need to submit a notice.
- Although the Council’s letter to Mr X’s MP in April 2017 did not quote the full extent of paragraph 67, I do not consider that in itself this is evidence the Council misinterpreted the law. While the regulations include paragraph 67(1A)(aa), stating clearly that commencement notices do not apply to extensions, they also contain paragraph 42(B)(6). This states clearly that someone in receipt of an exemption for a residential annex or a residential extension ceases to be eligible for that exemption if a commencement notice is not submitted. So, there are two directly contradictory paragraphs in the regulations. The regulations provide no system of priority between these two paragraphs to explain which takes precedence. This issue has not been before the courts, so there is no case law to clarify the regulations. This is unsatisfactory, as it means different people may interpret the regulations differently.
- The Council’s position at the time it decided Mr X’s planning application in 2016 and when it decided to withdraw the exemption in 2017 was that paragraph 42(B)(6) was relevant. It explained that it had regard to the government guidance that existed at that time, which also stated applicants must submit a commencement notice to benefit from an exemption.
- It is for a council to interpret the law, relevant regulations and/or government guidance when reaching decisions. Provided there is no fault in the way the Council reaches its view, the Ombudsman cannot question a decision a council makes. The Council decided paragraph 42(B) was most relevant when the Council decided to withdraw the exemption in 2017. At this time, the Council’s interpretation of the regulations was also supported by government guidance. This was a decision the Council was entitled to make, so I do not consider there was fault in the Council’s decision to withdraw the exemption.
- That said, I can see that the regulations could be interpreted differently and I recognise that since 2017, the government guidance has been amended in an attempt to clarify the inconsistency that exists. The government guidance now provides a steer for councils on the proper interpretation of the regulations to make it clearer what parliament intended. However, the regulations themselves still remain inconsistent as the wording of paragraph 42(B)(6) remains unchanged and it directly contradicts paragraph 67(1A)(aa).
- While I understand Mr X’s frustration, and I have sympathy for his situation, the Council took account of the regulations and guidance that existed in 2017 when it made its decision. Although there has since been revised government planning guidance (in March 2018) this does not apply retrospectively. So, there is no requirement for the Council to go back to any earlier decisions it has taken on CIL to reverse or alter them, so it was not at fault when it decided it should not do so.
- As the Council’s decision in 2017 was one it was entitled to make, I do not have grounds to criticise the Council or to seek a remedy for Mr X.
- The Council was not at fault.
Investigator's decision on behalf of the Ombudsman