In Herod Property Ltd v Westminster City Council [2026] EWHC 2122, the High Court dismissed a developer’s challenge to Community Infrastructure Levy (CIL) notices issued after an office-to-residential conversion had been completed and the flats sold.

The case is a useful reminder that, where a developer decides for itself that no CIL is payable because existing floorspace is “in use”, it carries the risk that the collecting authority could later come to a different view, with adverse financial consequences. The case continues a line of authority highlighting the inflexibility of the CIL regime. It reinforces the value of thorough due diligence on CIL liability, undertaken by a multidisciplinary team including planning law specialists, to identify the nuances of the legislation and mitigate risk for developers and investors. In an environment where CIL exposure can materially affect project viability and value, early specialist advice remains essential.

Background to the Herod Case

Herod Property Ltd (Herod) obtained prior approval from Westminster City Council (the Council) to convert an office building in Westminster, central London (W2), into residential flats under Class MA, Part 3 of Schedule 2 to the Town and Country Planning (General Permitted Development) (England) Order 2015. The conversion did not create any additional floorspace, and Herod therefore believed that no CIL was payable because the existing building had been in active use for the required six-month period within the previous three years.

On that basis, Herod relied on regulation 64(1A)(b) of the CIL Regulations 2010 and did not submit a notice of chargeable development or commencement notice. It also did not provide the Council with evidence that the building was “in use”. The works were completed and the flats were sold.

Several years later, the Council became aware of the development. Because Herod had not submitted a notice of chargeable development, the Council was required under regulation 64A of the CIL Regulations 2010 to issue its own notice. The relevant three-year period for assessing whether the building was “in use” was then assessed by reference to the Council’s later notice of chargeable development, not the actual commencement date. The Council concluded that there was insufficient evidence of occupation, deemed the building not to be “in use”, and issued CIL Liability Notices for just under £295,000.

Grounds of Challenge

Herod challenged the validity of the CIL Liability Notices on four grounds:

• The Council had breached its Tameside duty to make reasonable enquiries before deciding whether the building was “in use”.
• The Council had failed to comply with the CIL Regulations 2010 on material interests and apportionment.
• The Council should have issued its notice of chargeable development sooner.
• The liability notice was invalid because it incorrectly recorded that the Council was collecting Mayoral CIL for Transport for London.

Judgment

The High Court dismissed all four grounds of challenge. The court accepted that regulation 64(1A)(b) allows a developer not to file a notice of chargeable development where the chargeable amount is genuinely zero. This provision states that the obligation to file a notice of chargeable development does not apply to development “in relation to which the chargeable amount, calculated under regulation 40, is zero”. However, the court emphasised that a developer who chooses not to file one takes the risk that the collecting authority may later disagree with its assessment.

This risk was especially high where the developer’s zero CIL assessment depended on showing that the building was “in use”. Under the CIL Regulations 2010, if the collecting authority does not have sufficient information, or information of sufficient quality, it may deem the building not to be an “in-use building”.

The court gave detailed guidance in the judgment on how developers should navigate these situations. The essential point was that developers should seek agreement from the collecting authority on CIL liability before commencing development, particularly where the nil liability position depends on evidence that an existing building was “in use”.

The court also rejected the argument that the Council had failed to make reasonable enquiries. The judge described Herod’s complaint as an attempt to require the Council to uncover, through “detective work at public expense”, the information that Herod had failed to provide. The Council was entitled to assess the evidence available to it and was not required to conduct an extensive investigation. The decision is a clear warning to developers not to assume that their own view of CIL liability will necessarily be accepted after development has commenced.

The court also considered a point of general application about service of documents on agents where those documents are not passed on. The Council had warned Herod before commencement that it considered the development to be liable for CIL and sent that warning to Herod’s planning agents, who did not pass it on. Herod argued that it had no knowledge of the warning. The court agreed with the Council that Herod could not rely on its agents’ failure to pass on those warnings.

Herod’s apportionment argument also failed. CIL liability arose when the development commenced, not when the later liability notice was issued. The court was not prepared to interpret the CIL Regulations in a way that would move liability from the developer to flat purchasers simply because the units had already been sold.

Finally, the error on the face of the notice relating to Mayoral CIL was immaterial. It did not affect the substance of Herod’s liability or the Council’s decision and therefore did not invalidate the notices. Judicial review was also not a substitute for the statutory appeal route that Herod could have used before commencement.

Why Proving a Building is “In Use” Matters

The case turns on the practical significance of proving that retained floorspace is “in use” for CIL purposes. Where existing floorspace qualifies as “in use”, it may reduce or eliminate the chargeable amount. The evidential burden is therefore critical. If the collecting authority does not have good-quality evidence of occupation or use during the relevant period, it may treat the building as not being in use, with potentially significant CIL liability.

Key Lessons for Developers

Developers should also note the timing point. If no notice of chargeable development is submitted by the developer and the authority later issues its own notice of chargeable development, the relevant three-year look-back period may be assessed by reference to that later notice. Evidence that appeared sufficient at the point of commencement may be harder to establish years later, particularly where tenants have left, records have been archived, or the completed units have been sold.

How to Reduce CIL Liability Risks

Herod is a cautionary decision for developers pursuing conversions under the prior approval process and other schemes where existing floorspace is relied on to reduce CIL liability. The safest approach is to treat “in use” as an evidential issue to be proved before commencement. Developers should build the risk of a contrary CIL assessment into project strategy, due diligence, viability modelling and transaction documents, particularly where the development may be sold or funded before the collecting authority has accepted the nil liability position.

If you would like legal advice on CIL, including liability, exemptions, reliefs, notices or appeals, please contact Sabah Siddiq at Sabah.Siddiq@la-law.com.

About the Author

Sabah Siddiq is a senior associate solicitor in Lester Aldridge’s market-leading planning law team. Lester Aldridge’s Chambers and Legal 500-ranked planning team was ranked among the UK’s top 20 planning law teams in Planning Resource’s 2026 Planning Law Survey, a peer-led survey drawing on feedback from consultants, developers and local authorities across the planning sector.

Frequently Asked Questions

What is Community Infrastructure Levy (CIL)?

Community Infrastructure Levy (CIL) is a charge that local authorities can impose on new development to help fund infrastructure needed to support growth, such as transport improvements, schools, healthcare facilities and public spaces. CIL is payable on additional floorspace of 100 square metres or more, or where the development consists of one or more dwellings. Depending on the circumstances, developers may be able to reduce or avoid CIL liability through exemptions, reliefs or deductions for existing floorspace. However, strict procedural requirements apply, and failures to comply can result in unexpected liabilities or surcharges.

What is an “in use” Building for CIL Purposes?

For CIL purposes, an existing building may be treated as an “in use” building if it has been occupied lawfully for a continuous period of at least six months within the three years immediately preceding the date on which planning permission was first granted for the development. Where a building qualifies as “in use”, its floorspace may be deducted when calculating CIL liability, potentially reducing or eliminating the amount payable. Whether a building meets the test depends on the specific facts and the quality of evidence available to demonstrate occupation or use.

What Evidence can Prove a Building was in use?

There is no definitive list of documents that will prove a building was “in use”, but relevant evidence may include tenancy agreements, business rates records, utility bills, rental invoices, occupation licences, insurance documents and other records demonstrating lawful occupation during the relevant period. Developers should retain clear and contemporaneous evidence, as a collecting authority may require proof that occupation occurred for the required period. If sufficient evidence is not available, the authority may conclude that the building was not “in use” for CIL purposes.

Can a Local Authority Challenge a zero-CIL Assessment?

Yes. A developer may conclude that no CIL is payable, for example because existing floorspace qualifies for deduction, but the collecting authority is not bound by that assessment. The High Court’s decision in Herod Property Ltd v Westminster City Council highlights that where a developer relies on a zero-CIL position, particularly one based on an “in use” claim, it bears the risk that the authority may later reach a different conclusion if it is not satisfied with the evidence provided. This can result in substantial CIL liabilities being assessed after development has commenced or even after completion. Developers should therefore seek specialist advice and engage with the collecting authority at an early stage where CIL liability is uncertain.