This Class MA CIL case began with a developer converting offices in Bayswater into five flats using Class MA permitted development, believing that Community Infrastructure Levy should be nil because there was no increase in floorspace.
It then commenced the development without resolving that position with Westminster. The eventual demand was £380,326.30, including CIL, surcharges and interest. In R (Herod Property Ltd) v Westminster City Council [2026] EWHC 2122 (Admin), the High Court rejected the developer’s judicial review challenge.
The case is a useful warning because the judge did not say a developer can never conclude that the zero-CIL exception applies. The problem was what happened next.
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Five flats at 32 Palace Court
The property was 32 Palace Court, Bayswater, London W2. Herod Property Ltd bought it in May 2021 after the building had previously formed part of the offices at 32 and 34 Palace Court.
On 9 March 2022 its planning agent, DP9, applied for prior approval to change the use of 32 Palace Court from office use to five self-contained flats. Westminster granted prior approval on 19 May 2022. The development was common ground to fall within Part 3 Class MA.
Years earlier, when the scheme was first being considered, Herod’s adviser had said no section 106 or CIL payment would be due because there was “no uplift in floorspace”. That belief remained central to the later dispute.
Westminster had warned that CIL might bite
The prior approval decision itself included an informative saying the property had been identified as potentially liable for CIL. It told the recipient to submit an assumption of liability form and to notify the council before commencement.
In April 2023 a Westminster CIL officer also emailed DP9 explaining that development commenced under a general consent could be liable to CIL and that a Notice of Chargeable Development should be submitted before commencement. The judge recorded that DP9 did not pass that correspondence to Herod.
That did not ultimately rescue the developer. Sir Tim Kerr said the claimant could not hide behind the fact that its professional agent had not passed the warning on.
The crucial step: development started before liability was resolved
The works commenced at some point between 6 November and 31 December 2023. The exact commencement date was not in evidence.
Herod had not submitted a Notice of Chargeable Development and did not submit a commencement notice. The five flats were then created internally, and sales and occupation followed during 2024.
That timing mattered because the statutory review and appeal routes for disputing the CIL charge are tightly linked to commencement.
How £294,959 became a £380,326 demand
Westminster eventually prepared its own Notice of Chargeable Development on 22 August 2025.
On 28 August 2025 it issued a Liability Notice for £294,959.75, comprising:
- £253,349.08 for Westminster City Council
- £41,610.67 for the Mayor of London
The notice incorrectly described the second sum as being for Transport for London. Westminster accepted that was an error, but the High Court held that it was not material and did not invalidate the notices.
The Demand Notice issued the same day sought £380,326.30:
- £294,959.75 unpaid CIL
- £49,387.10 in surcharges
- £35,979.45 in late-payment interest
The separate surcharge notice included £2,500 for failure to submit a Notice of Chargeable Development, £14,872.99 for 30-day late payment, £15,616.64 for six-month late payment and £16,397.47 for failure to assume liability.
Westminster had treated 6 March 2024 as the deemed commencement date when calculating the demand, although it was common ground in the High Court that development had actually commenced in late 2023.
Herod said the existing floorspace should wipe out the charge
The developer relied on the CIL calculation rules for retained parts of an in-use building. In broad terms, Schedule 1 allows qualifying existing floorspace to be deducted when calculating the chargeable amount.
Herod argued that at least part of 32 Palace Court had been in lawful use continuously for six months during the relevant three-year period and that, with the retained floorspace deducted, the CIL liability should have been zero.
Westminster accepted the mathematical proposition that if the whole relevant gross internal area qualified as retained in-use floorspace, nil chargeable area would mean nil CIL. The fight was about the statutory process, the information available to the council and whether Westminster had acted unlawfully when it calculated the liability as it did.
Can a developer decide that no Notice of Chargeable Development is needed?
This is one of the most useful parts of the judgment. Regulation 64 contains an exception where the chargeable amount calculated under regulation 40 is zero.
Sir Tim Kerr rejected Westminster’s argument that the zero-CIL exception only applies where the collecting authority agrees. He held that a developer may lawfully decide not to submit a Notice of Chargeable Development if it considers the zero-CIL exception applies.
But that is not the end of the story. The collecting authority is not bound by the developer’s view. If the developer is wrong — or the authority does not have good enough information to accept the claimed in-use deduction — the CIL Regulations contain deeming powers which can operate against the developer.
The judge described those powers as “red flags” for a well-advised developer.
Regulation 113 and 114 rights can disappear on commencement
Under regulation 113, an interested person can normally request a review of the chargeable amount within 28 days of the Liability Notice. The review must be by someone senior to, and uninvolved in, the original calculation.
But, subject to the narrow exception where planning permission is granted after development has commenced, a regulation 113 review cannot be sought once the development has commenced.
Following a review, regulation 114 provides an appeal against an incorrect chargeable amount. It must be made within 60 days of the Liability Notice, but the same commencement problem applies: subject to the statutory exception, the appeal route is unavailable once development has started.
For practical purposes, regulation 114 chargeable-amount appeals are dealt with by the Valuation Office Agency. A small procedural curiosity in Herod is that paragraph 67 of the judgment refers to an appeal to the Planning Inspectorate; current GOV.UK CIL guidance and the VOA’s own 2026 regulation 114 decisions identify the VOA as the route for chargeable-amount appeals. The Planning Inspectorate deals with enforcement-related CIL appeals such as surcharges and commencement issues.
Our CIL reviews and appeals guide explains the different routes and deadlines.
The judge’s eight-step route for a developer expecting nil CIL
The judgment is unusually practical. At paragraphs 90 to 91, Sir Tim Kerr set out the prudent course for a developer confident that an in-use deduction should reduce CIL to zero. In summary:
- check with the collecting authority before commencement whether it agrees that CIL will be zero
- if it does not agree, consider voluntarily submitting a Notice of Chargeable Development while clearly stating the zero-CIL case
- submit a plan identifying buildings relevant to the retained-floor calculation
- provide the further information and evidence needed to support the deduction
- state the anticipated commencement date and confirm that a commencement notice will be submitted
- seek written confirmation of the council’s position before starting if possible
- if agreement is not forthcoming and development has not begun, obtain a Liability Notice and preserve the regulation 113 review and regulation 114 appeal routes
- only in an exceptional urgent case should commencement occur without that comfort, with the position explained and rights expressly reserved
The lesson is not “always pay CIL”. It is do not gamble away the statutory machinery that can prove you owe nothing.
Why the High Court rejected the challenge
Herod advanced four grounds. In substance it argued that Westminster had acted unreasonably by failing to recognise the retained in-use floorspace; had failed properly to identify material interests and apportion liability; had acted unreasonably in issuing the notices; and that the TfL/Mayor error on the Liability and Demand Notices invalidated them.
All four grounds failed.
The court held that responsibility for providing the information needed to establish an in-use deduction rested primarily with the developer. Westminster was not under a public-law duty to conduct a detective exercise to construct Herod’s case for it.
On apportionment, the important time was commencement. CIL liability had crystallised by then. Later sales of the completed flats did not provide a mechanism for shifting that crystallised liability to the purchasers.
The error naming Transport for London instead of the Mayor was obvious but caused no material prejudice, so it did not invalidate the notices.
Judicial review was not a substitute for the CIL appeal route
There was another problem for Herod even beyond the merits. Judicial review is a remedy of last resort. The statutory CIL scheme had provided review and appeal mechanisms which could have dealt with the disputed calculation before commencement.
The judge concluded that even if the substantive grounds had succeeded, he would have dismissed the claim because the developer had voluntarily put those alternative remedies beyond reach by commencing the development.
Herod and Segrue: similar warning, different route
Herod follows closely after Segrue Investments Ltd v Swindon Borough Council [2026] EWHC 2080 (Admin), but the two cases are worth keeping separate.
- Segrue concerned a missed statutory review/appeal opportunity and a later attempt to use regulation 65 to reopen the position
- Herod focuses on a Class MA development commenced before liability was properly resolved, and the loss of the regulation 113/114 routes once commencement had occurred
Put together, they point in the same practical direction: if you disagree with a CIL calculation, use the statutory route at the right time rather than hoping another route can be found later.
Class MA CIL: permitted development does not mean CIL can be ignored
This is the point for anyone looking at an office-to-residential conversion. Permitted development is a route to planning permission. It is not an exemption from the CIL regime.
A Class MA scheme creating one or more dwellings can be chargeable development. A developer may have an excellent argument that existing or in-use floorspace reduces the charge to nil, but it is still sensible to put the evidence in front of the collecting authority and preserve the review and appeal machinery before work starts.
You can read the full Herod judgment here. The neutral citation is [2026] EWHC 2122 (Admin), handed down by Sir Tim Kerr on 11 August 2026.
Published: 27th August 2026 — Class MA CIL case note checked against the full judgment in Herod Property Ltd v Westminster City Council.
