A £24,000 penalty for failing to submit one piece of paper to the council | Money

When Mark Walker’s stepfather had a heart attack, it was clear he could no longer live alone. Walker therefore got planning permission to extend his home in Rickmansworth, south-west Hertfordshire, so that the 81-year-old cancer patient could be cared for by his family. However, he did not formally notify Three Rivers district council when construction started at the end of 2017. The omission may cost him his home. Because he failed to submit a one-page form, he incurred a penalty of £24,274 and was ordered to stop the work.

“We stretched ourself to the limit with this project and, over a year on, we have been unable to finish it,” he says.

“We face having to sell our house in which we’ve invested so much because we can’t afford to take on more debt. How can £24,000 be a reasonable punishment for failing to fill in a single piece of paper?”

He has fallen foul of the Community Infrastructure Levy (CIL), a charge introduced in the 2008 Planning Act to enable councils to raise funds from new developments. It was designed to force commercial developers to contribute to the local infrastructure, but poorly drafted legislation has meant homeowners are being charged five-figure sums for home improvements that are supposed to be exempt.

On the face of it, the regulations are clear: residential extensions are exempt from the charge so long as the property is the owner’s main residence.

The problem is an obscure technicality. Deep amid the small print is regulation 42B (6) which states that the exemption will be revoked if the homeowner fails to return a “commencement notice” which notifies the council that the works are due to start. Even deeper is an apparently contradictory regulation 67 (1A), added in 2014, stating that exempted residential extensions don’t require to file this notice.

The anomaly is catching out unknown numbers of residents and their architects who either forget to return the form, or do not realise that it is required.

NHS consultant Ben Naylor* was forced to pay £27,000 to Three Rivers council for an extension that had been declared exempt from the CIL in 2017. Like Walker, he had omitted to submit the commencement notice before building work started and his exemption was revoked.

“The council continues to ignore all the evidence from the government which clearly indicates that residential extensions are exempted from giving a notice under regulation 67,” he says.

In Northhampton, Kate Southgate* was threatened with bailiffs and jail if she did not hand over £27,000 plus a £1,000 surcharge to Daventry district council.

It had exempted her single-storey extension from CIL early in 2016, but demanded the full sum 18 months later because it had not received a commencement notice.

“We were shocked and frightened,” she says. “We are retired and always pay our bills … we had no idea what this was all about. It seems our architect, who was dealing with all the paperwork, didn’t know about CIL as the council had only adopted it a few months before we applied for planning permission.

“The stress made me ill, so we paid up, although our legal adviser and housing minister Jake Berry confirmed that we were not liable. We had to take out a mortgage to find the money and we will be paying this for many years.”

Both Daventry and Three Rivers insist they were acting in accordance with legislation. The local government ombudsman, who investigated Naylor’s complaint, agreed, while admitting the situation is “unsatisfactory”. It concluded that as the CIL regulations are “directly contradictory” and that it’s not clear which of the contradictory provisions take precedence, Three Rivers could not be faulted for going with 42 B (6) and insisted that Naylor coughed up.

However, last March, three weeks after the Observer alerted the Ministry of Housing, Communities and Local Government to the confusion, Three Rivers told Mark Walker that it was suspending its demand.

The ministry had suddenly revised its guidance on the issue, and distributed it to councils to highlight the fact commencement notices are not required for exempted residential extensions. It had also declared its plans to amend the legislation following the completion of a consultation in May 2018.

It states: “It has always been our intention that residential extensions do not need a commencement of works notice to be exempt from paying the charge, since we introduced the policy in 2014. After being made aware of this issue, we amended our guidance to make the existing policy clearer. We have written to authorities explaining this.”

Extraordinarily, until the Observer highlighted Walker’s case last year, the government guidance had contradicted its own regulations and advised councils that extensions would lose their exemptions if a commencement notice was not received.

“It’s an elephant trap,” says Christopher Cant, a barrister specialising in property law. “It is not surprising that those who take the trouble to bone up on the government guidance, which assures them they don’t need to submit a commencement notice, feel they’ve entered an Alice in Wonderland world when they receive a CIL liability notice claiming significant sums with warnings as to what will happen if they are not paid.”

Cant told Three Rivers and Daventry that the charges should not apply to exempted residential extensions and a letter to Mark Walker from Sajid Javid, while secretary of state for housing, confirmed the fact, but both are standing firm.

Ian Vincent, chief executive of Daventry district council, says: “Mrs Southgate’s case has been carefully scrutinised by both the council and legal professionals, and we are satisfied that the levy has been applied correctly.”

Last month, Mark Walker received a new demand for the levy plus a £1,400 surcharge for his failure to submit the commencement notice and late payment. Walker’s stepfather had died suddenly in June, five months after the council had halted work on his new accommodation. He had been forced to live his final months alone in his own home.

Three Rivers declared that although the government had announced plans to revoke 42B (6), there was no timescale and so it wanted its money. It told the Observer that while regulation 67 (1A) removes the need for a commencement notice, the council “is bound to have regard” to regulation 42B (6) which states the opposite. It also pointed out that the CIL paperwork and its website make clear that homeowners will be liable for CIL if they, or their agents, fail to return the commencement form.

“The ministry’s guidance – and it is only guidance – was modified in early 2018, months after Mr Walker’s liability was incurred, so his liability remains,” it says. “In these circumstances, the council has a statutory duty to serve a demand notice.”

In the meantime, the ministry confirmed it is consulting on draft regulations which will remove 42 B (6) .

Any change will come too late for those who have paid the price for botched legislation. Walker has so far refused to pay and is being supported by a solicitor who maintains that he is not liable under the regulations.

However, he fears legal action against the council could bankrupt him. “I accept that I’m at fault for not returning the commencement notice, but £25,600 is an extortionate penalty,” he says.

“I understand the reasons for the CIL and I support them, but I really do not think that people like us, who were just trying to care for a sick relative, are the target market.”

* Not their real name

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