Category Archives: Retirement Homes

Recent changes to the Community Infrastructure Levy on Developing Property

On 24 February 2014 the Community Infrastructure Levy Regulations 2010 (CIL Regulations) were amended by the Community Infrastructure Levy (Amendment) Regulations 2014.

Mainly and in brief:

Under the CIL Regulations Councils can already adopt differential rates of CIL in their district based on locality and the sort of development envisaged be it for example retail, employment or housing.

CIL can now be charged at differential rates based on the scale of the development allowed by the planning permission – for example, dependent on how much floorspace, or how many units are planned within the development. So smaller schemes may be charged at a lower rate.

The CIL Regulations say that the rates of CIL must strike a balance between the desirability of receiving infrastructure funding from CIL and the impact on the viability of development in the council’s district. At the same time too low a rate of CIL could amount to unlawful state aid to Schemes under EU rules.

– A new formula for calculating what CIL is chargeable, with changes to the ‘vacancy test’ to avoid charging existing floorspace to be reused or demolished in the course of the build.

Under the old rules, to qualify to be discounted in this way, such floorspace must have been in lawful use for a continuous period of at least 6 months in the 12 months immediately preceding the date on which planning permission first permitted the development.

That had nasty timing implications for any scheme that needed get vacant possession during a period less than 6 months prior to the existing buildings being cleared.

The vacancy test now gives greater flexibility:

– pre existing buildings being retained for uses already lawful without new planning permission will not be subject to the vacancy test; and

– for all other pre existing buildings that the developer wants to be discounted from CIL, the ‘vacancy test’ now requires them to have been occupied for six months in the three years immediately previous to the date when planning permission first allows the development (not 12 months as previously).

In the case of a full planning permission the ‘date when planning permission first permits development’ will be the date on which the planning permission is granted.

Under the old rules it was the date of satisfaction of the last pre-commencement planning condition.

For an outline planning permission, the ‘date when planning permission first permits development’ will be the date of approval of the last outstanding reserved matter to be approved.

Where a planning permission is phased, the ‘date when planning permission first permits development’ for each phase is to be separately determined. It will be either the date of approval of the last outstanding reserved matter to be approved for that phase or, if there are no reserved matters for that phase, the date when the last pre- condition to commencement is discharged in respect of that phase.

Where the demolition of existing buildings qualifies for a CIL discount under the vacancy test the benefits of that discount now be spread across the phases of the scheme.

Hitherto the CIL Regulations only permitted phasing on ‘outline’ planning permissions. Phasing has now been extended to ‘full’ planning permissions also.

– Exempting residential annexes and extensions

To be exempt from CIL residential annexes must comprise only one new dwelling that is built entirely within the curtilage of an existing dwelling.

To be exempt from CIL extensions to existing dwellings must not comprise a new dwelling.

– Exempting self-build housing.

To be self-build houses exempt from CIL, these must be built by a person for occupation by that person as their main residence.

The exemption extends to self-build communal facilities built to benefit more than one occupier of self-build housing.

A self-built house can still be a self-build house if built on their behalf by a builder or developer rather than through the physical work of the individual occupant.

If the dwelling ceases to be occupied by the self-builder within three years the exemption allowed for self-build housing may be clawed back.

– Measures to reduce the requirement for developers to enter into highway agreements where the relevant infrastructure could be paid for by CIL.

The CIL Regulations prevent a condition being imposed in a planning permission that would require a developer to carry out highway works where those works are infrastructure for which CIL is payable.

The CIL Regulations also limit councils’ ability to get developer contributions towards infrastructure through section 106 agreements to prevent developer being required to carry out or fund infrastructure under section 106 agreements in addition to having to pay CIL.

This now extends to highway agreements.

– Local authorities now have until 6 April 2015 to adopt a charging schedule before the use of planning obligations under section 106 agreements becomes limited.

Changes to the rules on social housing relief.

– Discount market housing sold at 80% or less of its market value now attracts a new discretionary relief.

– The types of social housing that qualify for automatic relief include discounted rent housing where the rental is no more 80% of market rate.

– Communal areas can get CIL relief where and to the extent that they are intended for use by occupiers of qualifying social housing.

Appeals procedure changed to allow time for responding to representations to be extended by agreement.

CIL can now be paid for in kind by the developer providing infrastructure in lieu of CIL payment so that the cost of the infrastructure would be taken off the CIL charge.

Infrastructure being provided anyway by the Developer under a planning obligation cannot be treated as payment in kind.

This blog has been posted as a matter of general interest. It does not remove the need to get bespoke legal advice in individual cases.

Procedural Rules: Rigorous post Mitchell “New Normal” bites in Property related VAT Case

People need to be aware that the rigour to enforce procedural rules and time limits in the recent Andrew Mitchell case applies equally to the tribunal sector as a recent property related VAT case demonstrates.

McCarthy & Stone build and sell retirement accommodation made up of separate apartments served by communal areas, such as residents’ lounges. McCarthy & Stone furnished the communal areas and deducted the input VAT incurred on those furnishings. In HMRC v McCarthy & Stone (Developments) Limited, Monarch Realisations No 1 PLC (in administration) [2014] HMRC had ruled that the input tax was not deductible. So McCarthy & Stone appealed to the First-tier Tribunal (“FTT”). The crux of the appeal was whether there was a single zero rated supply of residential accommodation (as to which being a taxable though zero rated supply tax would be deductible) or a single supply with a zero rated (accommodation) element and an exempt (use of communal area furniture) element with tax not being deductible in relation to the exempt supply.

On 6 December 2012, in McCarthy & Stone (Developments) Ltd & Another v HMRC [2013] UKFTT 727 (TC), the FTT Judge upheld the appeal. The FTT ruled that there was a single zero rated supply. So the input tax on the communal area furnishings could be deducted.

On 8 February 2013, HMRC applied to the FTT for leave to appeal to the Upper Tribunal (“UT”) against the part of the FTT’s decision concerning the accounting periods after 1 April 1989 when some tax changes effected by the Finance Act 1989 came in. On 4 April 2013, the FTT granted HMRC leave to appeal. FTT staff emailed notification of this to HMRC and McCarthy & Stone’s representatives, Deloitte LLP (“Deloitte”), on the same day.

Rule 23(2)(a) of the Tribunal Procedure (Upper Tribunal) Rules 2008 (“the UT Rules”) says an appellant must give a notice of appeal to the Upper Tribunal in enough time that it is received within one month after the date on which the FTT sent the decision notice giving leave to the appellant. Thus, the period of one month here expired on 4 May 2013 but, since 4 May 2013 was a Saturday, the time limit was automatically pushed back, by Rule 12(2) of the UT Rules, to 5:00 pm the following Monday 6 May 2013. However HMRC only provided their notice of appeal to the UT 56 days late on 1 July 2013.

Having regard to all the circumstances of the case and the overriding objective of the UT Rules, the court felt that the two requirements specifically mentioned in the new CPR 3.9, predominated (1) the need for appeals to be conducted efficiently and (2) the need to enforce compliance with the UT Rules.

The judge therefore concluded that HMRC’s application to submit a notice of appeal after the time limit has expired should be refused. The Judge said that had he only been considering the factors listed in the old procedural rule CPR 3.9 he would, on balance, have granted HMRC’s application but the requirements in the new CPR 3.9 bore greater weight.

This blog is posted as a matter of general interest. It does not remove the need to seek proper legal advice in individual cases.