Development Q&A: Are new mezzanine floors liable for the Community Infrastructure Levy ("CIL")? Laura Parrish answers your questions
In this bulletin our lawyers provide practical tips and solutions to frequently encountered real estate development issues. Please feel free to submit your own questions by emailing [email protected]
Q: Are new mezzanine floors liable for the Community Infrastructure Levy ("CIL")?
A: No, the installation of mezzanine floors in an existing building will not be liable for CIL, provided that the works comprised in the planning application affect only the interior of the building.
Pursuant to section 55(2) Town and Country Planning Act 1990 ("TCPA"), works which affect only the interior of a building are not to be taken as "development", do not require planning permission and so are not liable for CIL.
The one exception to this is where the Secretary of State has, in a development order, set a threshold over which an increase in gross floorspace will constitute "development". The current threshold in respect of retail floorspace is 200 square metres (Article 44 of the Town and Country Planning (Development Management Procedure) (England) Order 2015). Internal operations which increase the retail floorspace of a building by more than this amount do require planning permission.
However, regulation 6(1)(c) of the CIL Regulations 2010 provides that the following works are not to be treated as "development" for the purposes of CIL:
'the carrying out of any work to, or in respect of, an existing building for which planning permission is required only because of provision made under section 55(2A) TCPA'.
In other words, if a planning application is only required because of section 55(2A) TCPA – as is the case with retail floorspace – it is not liable for CIL. This ensures parity for retail mezzanines alongside all other types of mezzanine and internal works which do not require planning permission and so do not attract CIL.
CIL does, however, remain chargeable on mezzanine floorspace where the works form part of a wider planning application or are accompanied by related external works. In such cases, CIL can be reduced by splitting the development into two separate applications. This was confirmed earlier this year in R (on the application of Orbital Shopping Park Swindon Limited) v Swindon Borough Council and another  EWHC 448. In this case, the owners of a shopping centre made two planning applications – one for the installation of mezzanine floorspace of around 1,709 square metres and one for external alterations. This was a deliberate strategy to avoid a CIL liability of over £170,900. The Council took the view that the two applications were linked and attempted to charge CIL in respect of the mezzanine floorspace. On judicial review, the high court held that the CIL demand was unlawful; there was no statutory basis for treating the two permissions as one. The applicant had simply taken advantage of a legislative scheme which permits it to submit two separate planning applications for each act of operational development that it wished to pursue.
This case highlights the importance of a careful consideration of the impact of CIL on proposed works prior to the submission of a planning application. Developers can make considerable savings by strategically separating operational works into two planning applications – subject, of course, to the additional costs of submitting more than one application.