AC-2025-LON000257 - [2025] EWHC 2984 (Admin)

The Claimant seeks leave to challenge the decision of 4^th September 2025 not to withdraw the liability notice and demand notices and refuse to agree not to collect CIL (plus surcharges and late payment interest). The arguments concerning this and the earlier decisions entirely overlap. On that basis I will grant permission for judicial review against the 4^th September 2025 decision, although for the reasons set out below, I reject the challenge to both decisions on both grounds.

On Ground One I accept the Defendant’s submissions that a Disqualifying Event (DE) does not have to occur during the clawback period. That is the construction which best accords with the words of Regulation and the overall scheme.

The starting point in statutory interpretation is the words of the statute or regulation, see Lord Hodge in Project for Registration of British Children at [29]. Although that case concerned primary legislation, whereas the present case concerns secondary legislation, the same principle must apply, albeit with perhaps slightly less force.

Here Regulation 54D(1) says “a disqualifying event occurs before the end of the clawback period”. It does not say the DE has to occur during the clawback period. The alleged DE, the sale of the property, did occur “before the end” of the clawback period. Therefore, the actual words are strongly in the Defendant’s favour.

The Claimant now accepts that the words of Regulation 54D(1) can encompass a DE before the start of the clawback period, but seeks to argue that different periods should be required for different exemptions/reliefs. Although that might be theoretically possible as a matter of construction if any other interpretation were impossible to apply, in my view the Court should be slow to adopt an interpretation that gives different meaning to the same words depending on which other parts of the Regulations are in play.

Importantly, as the caselaw makes clear, this is a very detailed and comprehensive scheme for CIL as a whole, and the self-build exemption specifically. The court should therefore in my view be very cautious about reading words or conditions or limitations into the Regulations that do not appear on their face.

I agree with the Defendant that given that the exemption can be claimed, and thus the levy not paid, before the beginning of the clawback period, there is considerable logic in it being able to be withdrawn before the end of the period. The result of the Claimant’s argument is that an individual could gain the benefit of the exemption throughout the period that the dwelling was being constructed and right up to the service of the completion notice, even though the individual was well aware that the development was no longer eligible for the self-build exemption. This becomes even odder in cases where no compliance notice is served. The onus then falls on the Council to determine whether the development has been completed before it can require the full CIL to be paid.

In my view the much more obvious and logical construction is that as soon as a DE occurs under Regulation 54D(2) then the exemption ceases to apply and the full CIL becomes payable.

The Claimant submits that “self-build housing” means the housing that can be occupied by the self-builder, and therefore must have been completed. Regulation 54A is framed in the present tense as being a building built and occupied by P, which as a matter of language points to it only being such a building once constructed and occupied. However, in my view, that is not how the Regulations are framed. Regulation 54B is necessarily based on the intention to construct “self-build” housing, and the claim is made on the basis of that intention, see the wording of Regulation 54B(2)(a). Regulation 54D(2)(a) provides for withdrawal of the exemption if there is “any change relating to the self build housing… such that it ceases to be self-build housing”. If the intention necessary for the claim in Regulation 54A no longer exists, here by reason of the sale, then that is a “change relating to the self-build housing”, because the basis of the exemption has fallen away. In my view that is the interpretation which again best fits the words and the purpose of the Regulations.

The Claimant also argues that there was no DE here because the sale of the property to a developer did not amount to a DE. However, that sale is clear evidence that the intention that the development should meet the conditions for self-build housing no longer existed and the development cannot meet the relevant criteria. Therefore, the criteria in Regulation 54D(2)(a) for a “change” has been met.

For all these reasons I accept that there was a DE and therefore Ground One fails.

In respect of Ground Two the first issue is whether the Defendant has a discretion to not recover CIL even if there has been a disqualifying event. This turns on the submission that Regulation 65(7) creates a discretion not merely to withdraw a liability notice but to waive the underlying liability.

As I have set out above and as confirmed in the caselaw, the Regulations set out a very detailed statutory scheme. The purpose is to encourage self-build housing, but within the clear parameters of that detailed scheme.

Critically the Regulations make provision to allow someone with two inconsistent planning permissions to avoid paying CIL twice, and also for discretionary relief in carefully prescribed circumstances. The Claimant could have transferred liability for CIL under Regulation 31 from the 2016 permission to the 2023 permission during the period before the 2023 permission was commenced. Alternatively, the Claimant could have sought to rely on the abatement provisions in Regulation 74B, or alternatively make provision in the contract of sale of the site for the purchasers to apply under Regulation 74B and reimburse the Claimant. The Claimant took none of these steps. I note that the Claimant was professionally represented throughout.

Quite apart from the detail of the Regulations, there are two overarching reasons why it would be surprising if there was a broad discretion to waive CIL. Firstly, as is set out by the High Court in Clamp, one would not normally expect a tax collecting authority to have an unfettered discretion to waive the tax that Parliament had set. That point is even stronger here than in Clamp, because the local authority under the CIL regime is not in the same position as HMRC with broad management powers and a fairly wide discretion to reach “arrangements” with the taxpayer. So, it is even less likely that the local authority would have such a broad discretion to waive liability.

Secondly, to construe Regulation 65(7) as a broad discretion to waive CIL seems inconsistent with the rest of the Regulations. It would be a wholly unfettered discretion, with no criteria set out, in marked contrast to Regulation 55. There is no parallel power in relation to demand notices, so if the liability notice can simply be withdrawn, the court would have to imply into the Regulations a power for the demand notice to be withdrawn or to cease to have effect. The Claimant argues that by withdrawing the liability notice the underlying liability itself ceases. However, for Regulation 65(7) to have this effect would be inconsistent with the Court of Appeal decision in Braithwaite, which held that the liability continues to exist even where the liability notice is withdrawn.

In my view all these factors point to the Defendant’s construction being the better one. I accept that upholding the liability notice will result in some element of double recovery by the Council. Although credit is given in the CIL liability notice for the 2023 permission in respect of the outbuilding which has been demolished, there will remain a significant CIL payment in respect of a building that cannot be built. However, as I have said, this could have been avoided by the Claimant if he had taken the appropriate steps under the Regulations. Further, the Regulations contemplate that there can be an element of double recovery in certain situations. If the second development is smaller than the first, then the offsetting under Regulation 74B is only of the second amount, potentially leaving CIL payable above that which would be justified by the development that is going to be built. This is not a major point, but it does show that some element of double recovery is not inimical to the scheme. The mere fact that there is some double recovery does not lead to a conclusion that the Regulations have to be read in a different way. That is apparent from the decision in R (Hudson Contract Services) v SSBIS[2016] EWHC 844 (Admin) at [68]-[71], albeit in a different context.

The final issue is whether, if I am wrong above and there is a discretion to waive liability, the Defendant lawfully exercised that discretion. The Claimant submits that the Defendant has unlawfully fettered its discretion by relying on “consistency” to in effect decide that the discretion will not be exercised. However, the letter of 4^th September 2025 does take into account the relevant considerations, namely what the Claimant had said about his personal circumstances (although he had given no verifiable financial information), the scheme of the Regulations, and the issue of “double recovery”. In my view, on the facts of the case, the Defendant was entitled to refuse to exercise the discretion, assuming it had one, having considered the relevant circumstances.

For those reasons I refuse Ground Two.