CIL, 3 Yr clawback, appeal when owner dies.

[Claire B]

My husband and I decided to sell the matrimonial home and build 2 separate houses as part of the separation agreement. We qualified for the CIL self build exemption as we each planned to make our build our home. My husband died before his property was completed and I have been trying to sell it to pay off his debts since. I now have a buyer but their search alerted the council to the fact that the property was being sold before the three year period and they have said that if we complete before that date the CIL will be due. 

 

I had no idea what CIL was until this came up, I'm not a builder, we employed architects &  a building company to do the whole job. The build came in at a loss (it was for ourselves not profit) and I can't afford to pay this (though they haven't stated an amount yet but house is 400m2) This seems harsh and grounds for appeal. Anyone have experience of this? 

 

 

[SteamyTea]

Can the prospective buyer rent it until the 3 years is up?

[Mr Punter]

Hello Claire and welcome.

 

It sounds like a fairly complex question and is probably best put to an expert in these matters.  400m2 is a very large house!

[newhome]

19 minutes ago, Claire B said:

This seems harsh and grounds for appeal. Anyone have experience of this? 

 

 

Unfortunately the CIL rules are quite clear that if you do not live in the property for 3 years that the CIL exemption is cancelled and CIL is due. You could write to the council asking them to make an exception or appeal the CIL charge once it comes. Here is the site to do that but it might be worth looking through the past cases listed to see if there is something similar. 

 

https://www.gov.uk/guidance/appeal-a-community-infrastructure-levy-enforcement-notice

 

 

[newhome]

5 minutes ago, SteamyTea said:

Can the prospective buyer rent it until the 3 years is up?

 

The rules are that you must live there for 3 years after completion. 

[SteamyTea]

Right, so it is habitation rather than possession.

[Moonshine]

6 minutes ago, newhome said:

The rules are that you must live there for 3 years after completion. 

 

Is there no sliding scale, e.g. move out after 1.5 years you are only liable to 50% of the CIL?

[Claire B]

Just now, newhome said:

 

Unfortunately the CIL rules are quite clear that if you do not live in the property for 3 years that the CIL exemption is cancelled and CIL is due. You could write to the council asking them to make an exception or appeal the CIL charge once it comes. Here is the site to do that but it might be worth looking through the past cases listed to see if there is something similar. 

 

https://www.gov.uk/guidance/appeal-a-community-infrastructure-levy-enforcement-notice

 

 

Thank you, I was planning to write to them but wanted to do it armed with advice! 

3 minutes ago, Moonshine said:

 

Is there no sliding scale, e.g. move out after 1.5 years you are only liable to 50% of the CIL?

No, I asked. If you sell it one day before the 3 years you pay the whole lot. 

[newhome]

5 minutes ago, Moonshine said:

 

Is there no sliding scale, e.g. move out after 1.5 years you are only liable to 50% of the CIL?

 

Unfortunately not. It’s all or nothing. 

 

 

[Moonshine]

1 minute ago, Claire B said:

No, I asked. If you sell it one day before the 3 years you pay the whole lot. 

 

Ouch, hope you get your situation sorted.

[nod]

We’ve been in ours a year and have recently made a enquiry regarding selling and starting another build 

We where told pretty clearly 

if the house is sold one day short of three years from the date we moved in We would be liable for the full 15k 

We had also hoped for a sliding scale 

[Moonshine]

9 minutes ago, nod said:

We’ve been in ours a year and have recently made a enquiry regarding selling and starting another build 

We where told pretty clearly if the house is sold one day short of three years from the date we moved in We would be liable for the full 15k

 

Out of interest how would the local authority generally find out that you had moved and were liable to the CIL?

[Claire B]

2 minutes ago, Moonshine said:

 

Out of interest how would the local authority generally find out that you had moved and were liable to the CIL?

When you sell your buyer will have a solicitor conduct a 'search' which I assume includes asking the council questions like this. The council will then contact the seller to let you know they've heard you want to sell and that you'll have a large bill coming if you proceed. 

 

[Mr Punter]

I wonder if the death of the person qualifying for exemption has been tested or was anticipated in the legislation?

 

 

[Jilly]

Gulp. Wait out the 3 year and rent the house out in the meantime?   Take a fixed rate interest only mortgage for 3 years to cover his debts til you can sell and get straight? Or some deal with a delayed completion, but take advice as that could be tricky. 

[newhome]

3 hours ago, Jilly said:

Gulp. Wait out the 3 year and rent the house out in the meantime?   Take a fixed rate interest only mortgage for 3 years to cover his debts til you can sell and get straight? Or some deal with a delayed completion, but take advice as that could be tricky. 

 

Council tax and electoral roll will show that you've moved out. 

 

[SteamyTea]

6 hours ago, Claire B said:

build 2 separate houses as part of the separation agreement

Do you own the house/project, were you still married, are you liable for the debt or your husband\ex-husband estate?

You avoid people getting on the council tax register, let it out to a couple of students.  They pay a term in advance and quite often leave before the year is out.

[newhome]

3 hours ago, Mr Punter said:

I wonder if the death of the person qualifying for exemption has been tested or was anticipated in the legislation?

 

 

Death of the CIL liable person is in the legislation but where liability is due, not after an exemption is granted. The way the legislation is written you would lose the right to the exemption I believe unless the council adopts a more compassionate approach but that's never guaranteed. 

 

Quote

Effect of death on assumed liability

39.—(1) This regulation applies where a person (P) who has assumed liability to pay CIL in respect of a chargeable development dies before the chargeable development is commenced.

(2) P’s assumption of liability ceases to have effect.

(3) A person may assume liability to pay CIL in respect of the chargeable development before it is commenced.

(4) An assumption of liability under paragraph (3) must be made in accordance with regulation 31; but for the purposes of that regulation as it applies to this paragraph, an assumption of liability notice is not valid unless it is accompanied by P’s death certificate.

 

Quote

Outstanding liabilities on death

108.—(1) This regulation applies where—

(a)a person (the “deceased”) who is liable to pay CIL in respect of a chargeable development dies after that chargeable development is commenced; and

(b)at the time of the deceased’s death an amount which the deceased was liable to pay has not been paid.

(2) The deceased’s executor or administrator is liable to pay—

(a)the unpaid amount; and

(b)any interest, surcharges and costs applied to the unpaid amount, or imposed on the deceased in respect of the unpaid amount,

and may deduct out of the assets and effects of the deceased any payments made (or to be made).

(3) But liability of the executor or administrator does not arise until the service on that person of a notice requiring payment of the amounts referred to in paragraph (2).

(4) Where before the deceased’s death an amount in excess of the deceased’s liability for CIL has been paid and has not been repaid under regulation 75, the deceased’s executor or administrator is entitled to the amount.

(5) The liability of the executor or administrator under this regulation is a liability in the executor or administrator’s capacity as such.

(6) Insofar as it is relevant to the executor’s or administrator’s liability under this regulation in the administration of the deceased’s estate, the executor or administrator may initiate, continue or withdraw an appeal under regulation 117, 118 or 119.

(7) Any amount which an executor or administrator is liable to pay under this regulation may be recovered from the executor or administrator by the collecting authority in accordance with the provisions in Chapter 3 of this Part.

 

You could possibly request "Discretionary relief for exceptional circumstances" here:

 

Quote

Discretionary relief for exceptional circumstances

55.—(1) A charging authority may grant relief (“relief for exceptional circumstances”) from liability to pay CIL in respect of a chargeable development (D) if—

(a)it appears to the charging authority that there are exceptional circumstances which justify doing so; and

(b)the charging authority considers it expedient to do so.

(2) Paragraph (1) is subject to the following provisions of this regulation.

(3) A charging authority may only grant relief for exceptional circumstances if—

(a)it has made relief for exceptional circumstances available in its area;

(b)a planning obligation under section 106 of TCPA 1990(1) has been entered into in respect of the planning permission which permits D; and

(c)the charging authority—

(i)considers that the cost of complying with the planning obligation is greater than the chargeable amount payable in respect of D,

(ii)considers that to require payment of the CIL charged by it in respect of D would have an unacceptable impact on the economic viability of D, and

(iii)is satisfied that to grant relief would not constitute a State aid which is required to be notified to and approved by the European Commission.

(4) The Mayor may not grant relief for exceptional circumstances in respect of a chargeable development unless a claim for that relief is referred to the Mayor by a London borough council in accordance with regulation 58(3).

 

[Claire B]

23 hours ago, Mr Punter said:

I wonder if the death of the person qualifying for exemption has been tested or was anticipated in the legislation?

 

 

I can't find any evidence of this in my search so far. I've looked at pervious appeal cases and decisions and they all seem to be based around the paperwork ... council not issuing notices at the right time. In fact it appears you can't use the appeal process to override a decision made that you are liable for CIL so I guess you have to get solicitor, possibly court involved. Its a lot of hassle. I'll just delay completion on the sale if the council don't agree to waiver the charge. 

[Claire B]

19 hours ago, newhome said:

 

Death of the CIL liable person is in the legislation but where liability is due, not after an exemption is granted. The way the legislation is written you would lose the right to the exemption I believe unless the council adopts a more compassionate approach but that's never guaranteed. 

 

 

 

You could possibly request "Discretionary relief for exceptional circumstances" here:

 

 

Thanks, As you say these talk about payment being due from the estate where the deceased was liable for CIL which is understandable and fair.  In this case the deceased was given exemption and died just a few months before completion. I'll post the result of this case on the thread once it has been decided. 

[newhome]

51 minutes ago, Claire B said:

In fact it appears you can't use the appeal process to override a decision made that you are liable for CIL

 

I'm sure someone on here appealed for this reason - see here:
 

 

And there is a database of appeals including those relating to liability. 

https://www.gov.uk/government/collections/community-infrastructure-levy-appeal-decisions#2019

 

 

[Claire B]

Just by way of update, different councils have different rules on this and my local council (Chelmsford) say in their rules  they don't accept appeals at all, on any grounds. I have therefore decided to delay completion on the sale of the property until the three year period is up. Fortunately this is only a delay of 8 weeks from the completion date my buyer wanted and they are in a rented flat where they can't get out of the contract before my new completion date anyway so it has worked out okay in this instance. 

[Temp]

On 29/11/2019 at 15:34, SteamyTea said:

Can the prospective buyer rent it until the 3 years is up?

Not allowed according to..

 

https://www.fbcmb.co.uk/media-centre/news/article/6168/cil-and-the-self-build-exemption

 

"There is then a claw back period of three years. If, within that period, a disqualifying event occurs then the exemption is lost and the payment of the normal CIL has to be made, plus a surcharge. The events include ceasing to occupy as the sole or main residence; failure to comply with the evidential requirements; letting out the building; selling it. As a result it is vital that before the self build arrangement is set up, legal advice is taken as to the timing of any alteration in the title to the land, such as leases or family transfers."

 

 

[Temp]

I think I would still write to your MP and explain the situation. As him/her to pass it on to the relevant department. I understand there were plans to review the CIL legislation.