Section 4: Regulation 115 appeals – apportionment of liability

The Valuation Office for Agency's (VOA) technical manual for Community Infrastructure Levy (CIL).

4.1 General

These appeals relate to disputes over a collecting authority’s apportionment of liability between different owners in accordance with the apportionment formula contained in regulation 34. This formula apportions a CIL charge between different owners on a pro-rata basis based on the value of the individual owner’s interest compared to the aggregate of the values of all the material interests in the land. These cases therefore involve determining disputes over the both the chargeable amount and the valuations used in the statutory apportionment formula.

4.2 Default Liability

These appeals may arise when a person commences development in accordance with a planning permission but no one has assumed liability to pay the CIL in respect of that development. If that happens then, by default, anyone who owns a material interest in the land becomes liable to pay the charge (regulation 33). If there is more than one owner then the collecting authority must apportion the charge between the individual owners in accordance with the apportionment formula in regulation 34.

The need for an apportionment in accordance with regulation 34 may also arise if someone has assumed liability to pay the CIL charge but the collecting authority has then been unable to recover some or all of the charge from them and there is at that time more than one person who owns a material interest in the land. The charge or remaining charge is then apportioned between those owners (regulation 36).

4.3 Definition of Material Interest

A material interest in the relevant land is defined in regulation 4 as a legal estate in that land which is:-

(a) a freehold estate

(b) a leasehold estate, the term of which expires more than seven years after the day on which planning permission first permits the chargeable development

4.4 The Apportionment Formula

Regulation 34 provides that where liability to pay CIL has to be apportioned between each material interest in the relevant land the owner (O) of a material interest in the relevant land is liable to pay an amount of CIL calculated by applying the following formula:-

VO x A / V

Where:-

VO = the value of the material interest owned by O;

V = an amount equal to the aggregate of the values of each material interest in the relevant land; and

A = the chargeable amount payable in respect of the chargeable development.

Where O is granted relief in respect of the chargeable development, O is liable to pay an amount of CIL equal to the amount calculated in accordance with the above formula less the amount of relief granted to O.

4.5 The Value of a Material Interest

Regulation 34(4) provides that:-

(a) The value of a material interest is the price that it might reasonably be expected to obtain if sold on the open market on the day the apportionment takes place.

(b) The valuation shall assume that the chargeable development has been completed the day before the apportionment takes place.

Regulation 34(5) provides that the price referred to in paragraph (4) shall not be assumed to be reduced on the ground that the whole of the relevant land is to be placed on the open market at the same time. In other words, any ‘flooding of the market’ due to the whole of a large development being on the market at the same time is to be ignored.

The above basic definition of market value is very similar to that used for taxation purposes (s.160 of the Inheritance Tax Act 1984 and s.272 of the Taxation of Chargeable Gains Act 1992). Guidance on the valuation assumptions derived from case law relating to the definition of market value for taxation purposes can be found in the Inheritance Tax Manual and the CGT & Other Taxes Manual.

The valuation date is the day the apportionment takes place (i.e. the day the collecting authority undertook their apportionment assessment). However, the additional special assumption in (b) requires the valuer to assume that the chargeable development has been fully completed even if in reality the land was still bare land or partly developed at the valuation date.

4.6 Joint Liability

Where two or more persons are joint owners of an interest in land then they are each jointly and severally liable to pay any CIL payable in respect of that interest (regulation 37(1)). In cases where an interest in land is held jointly the interest to be valued is therefore the entirety interest, not the undivided shares of each owner.

4.7 Appeals

The right to appeal against the collecting authority’s apportionment of the CIL liability is contained in regulation 115. Details of who can appeal and the time limits for making an appeal are set out in Section 6 of this Manual. Regulation 115(6) provides that where an appeal is allowed the appointed person must reapportion the liability between each material interest in the land.

4.8 Possible Issues in Appeals

As the responsibility of the appointed person is to ‘reapportion the liability’, regulation 115 appeals could relate to both the calculation of the basic CIL liability and the apportionment of that liability between the different owners in accordance with the statutory apportionment formula. These appeals could therefore involve any of the issues that may arise in regulation 114 cases (see paragraph 3.14 above) and issues relating to the valuations used in the statutory apportionment formula including:-

  • the definition of market value
  • the facts relating to the details of the completed property
  • the facts relating to all the interests to be valued
  • the appropriate valuation method
  • the comparable evidence in support of the collecting authority’s valuations
  • the comparable evidence in support of the appellant’s valuations

4.9 Examples

Examples to illustrate some of the issues that may arise in Regulation 115 cases are included in Appendix 2.