Relieving Community Infrastructure Levy during the outbreak of coronavirus

When dealing with requests for relief from community infrastructure levy liabilities due to the impact of the coronavirus on entities' financial positions, authorities need to consider the possible state aid concerns, writes Kelly Stricklin-Coutinho.

Authorities can expect to be faced with requests that Community Infrastructure Levy (“CIL”) payments are deferred, or that relief from CIL liability is given because of the impact of the outbreak of coronavirus. One potential issue with an authority doing so is that state aid law applies to all elements of the CIL regime, including those where the relief is specifically stated to be subject to state aid law. As such, any deviation from a strict application from the CIL regime should be considered from a state aid perspective. Failure to do so could result in the authority giving prohibited state aid, which has a potential impact on both the authority giving the relief and the applicant for the relief.

State aid regime

The prohibition from granting state aid is set out in Article 107 TFEU. It prohibits a government (which includes local and planning authorities) from giving a selective advantage from its resources to an undertaking, where there is a potential distortion of competition and an effect on trade between Member States. 

Examples of such advantages include relief from charges or levies which the authority might otherwise be entitled to have.

Where a regime is of general application, it does not give selective relief and as such is not in breach of Article 107 TFEU. However, relief given to a specific entity may well be regarded as a selective advantage to that entity. 

Application of state aid law to CIL

In ordinary circumstances, the CIL regime works (broadly) so that an authority may give an exemption from the liability to pay CIL, unless giving that exemption would amount to a prohibited state aid. 

The outbreak of coronavirus does not change that position.

The European Commission has recently set up a Temporary Framework under which government can give assistance in certain circumstances where there is a need for it due to the outbreak of the virus.

Generally speaking, under the Temporary Framework aid will be permitted in circumstances where the need for the assistance arises from the outbreak of the coronavirus.

The Temporary Framework has also indicated the Commission’s willingness to accept certain measures, which permit assistance through the tax system which help with liquidity. For example, it has identified that deferral of tax payments or allowing payments by instalments are likely to be permissible measures. Similarly, granting interest free periods and the suspension of debt recovery may be permitted. Any such measures have to be given by 31 December 2020 and the end date for the deferral must be 31 December 2022.

It is crucial to note that if the Temporary Framework is to be relied upon, notification to and approval from the European Commission is required (although these are being turned around at very high speed). 

Application to Community Infrastructure Levy

Although the Temporary Framework refers specifically to taxes, one would expect similar considerations to apply to Community Infrastructure Levy, as a charge raised by government.

The Temporary Framework makes clear that giving aid within the usual means continues to be permitted. The usual arguments one would make as to why prohibited state aid is not given in granting an exemption therefore apply. For example, if the amount is within the de minimis exemption, then that will continue to be applicable. Likewise, if the grant can be said to fall outside the scope of Article 107 TFEU altogether, or if it can be said to fall within another exemption, those will continue to be permissible. For example, any advantage which is given on market terms will not fall within the prohibition set out in Article 107 TFEU.

Deferrals of liabilities such as CIL nonetheless need to be done with care. Authorities considering permitting deferrals should consider the basis on which they do so in state aid terms. For example, a deferral which does not require interest to run from the date on which the liability would otherwise have been due may be considered to give an advantage to the recipient. Permitting payments by instalments should be done with similar care, as they could be considered to give a cash flow advantage to the recipient.

Where liabilities are at the higher end, the de minimis exemption will not be available, so the position must be considered with particular care. If the amount is sizeable and the primary position is that Article 107 TFEU is triggered and no exemption applies, the authority can consider applying (using the usual government channels to deal with state aid) for a specific measure to permit the aid. The types of measure which have been approved so far have been sizeable, so notification should be considered in that context. Similarly, if an authority wishes to consider waiving the liability now or in due course, it will have to consider the state aid basis for doing so.

Kelly Stricklin-Coutinho is a barrister at 39 Essex Chambers. She can be contacted This email address is being protected from spambots. You need JavaScript enabled to view it..