CIL review and recovery
Calculation, indexation, relief, exemption and surcharges
Read more →Section 106
Contributions that were paid, but never properly spent
Section 106 money leaves your account years before anyone checks what happened to it. Many agreements give you a right to have it back if it wasn’t spent, wasn’t spent in time, or wasn’t spent on what it was for.
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Section 106
The agreement usually says more than people remember
A Section 106 agreement is a contract. It fixes the sum, the trigger, the purpose the money must be applied to, and very often a period within which the authority has to apply it. What happens after payment is rarely tracked by anyone on the developer side.
That is where recoveries sit. Not in arguing that the obligation was wrong, but in holding the authority to the terms that were agreed at the time.
What we see
- Repayment and clawback clauses that were never invoked
- Contributions unspent after the period the agreement allowed
- Money applied to a project other than the one specified
- Sums paid against units, phases or floorspace never delivered
- Obligations discharged or reduced by a later variation after payment
- Index-linked uplift applied on the wrong date or the wrong index
Where the money usually is
Four places a Section 106 comes loose
Unspent contributions
The clock ran out and nobody claimed
Many agreements require the authority to spend a contribution within a set period, failing which it becomes repayable. Those dates pass quietly. The obligation to repay is rarely volunteered.
Misapplied contributions
Spent, but not on what it was for
An education contribution applied to something other than the specified school, or a travel plan sum absorbed into general budgets, may fall outside the permitted use the agreement defines.
Variations
The scheme changed and the payment didn’t
Where a deed of variation reduced or removed an obligation after money had already been paid, the overpayment does not always find its way back automatically.
Phasing and triggers
Paid ahead of the trigger
Contributions paid on a whole-site basis for a scheme delivered in phases, or paid before the contractual trigger was actually met, can leave a developer materially out of pocket.
The review
What the Section 106 review covers
- Every executed agreement, deed of variation and unilateral undertaking on the site
- The payment record: what was paid, when, and against which trigger
- Whether each contribution carries a repayment, clawback or time-limited spend clause
- Whether the authority has evidence of applying the money to the permitted purpose
- Whether indexation was calculated on the correct index and base date
- Whether the scheme as built still matches the scheme that was charged for
- Where limitation stands on each potential route
- Whether the matter is better resolved by correspondence or formally
Whether anything is recoverable on a particular scheme depends on the agreement, the evidence, limitation and the facts. Establishing that is exactly what the free audit is for.
Two distinct claims
Unspent at the end of the term, or spent on the wrong thing
These are separate routes with separate triggers, and it is worth being clear which one a scheme falls into — because one depends on a date passing and the other does not.
Route one
Unspent funds at the end of the term
Most agreements give the authority a defined period in which to apply a contribution — commonly five or ten years from receipt. If the money has not been spent by the end of that period, the agreement will usually make the unspent balance repayable, often on demand. The right crystallises on the date, but the money does not come back on its own: somebody has to ask.
Route two
Funds applied outside the permitted purpose
A contribution is paid for a defined purpose set out in the agreement. Where it has been applied to something else, that is a breach of the covenant in its own right. This claim does not wait for a spend period to expire — it arises when the money is misapplied, which can be years earlier. Where sums were drawn for works outside that purpose they were not properly applied, and the courts have ordered an account of what qualified and what did not. Patel v Brent LBC [2005] EWCA Civ 644.
Interest
A recovery is the money, plus the time it was held
On a contribution paid years ago, interest is frequently the larger half of the claim. How it is calculated — and whether it compounds — makes a material difference, so it is worth understanding the difference before anyone quotes you a figure.
Simple interest
Charged on the original sum only. The same amount is added every year, and accrued interest never itself earns interest. A contribution of £250,000 at 5% simple earns £12,500 a year, every year, regardless of how long it runs.
Compound interest
Interest is added to the balance at the end of each period, and the next period’s interest is charged on that larger balance. The same £250,000 at 5% compounded annually earns £12,500 in year one, £13,125 in year two, and £17,589 in year eight — because by then interest is running on £351,775 rather than £250,000.
The gap widens with time, which is exactly why it matters on historic obligations. Over eight years it is worth around £19,000 on a single contribution of this size. Across a portfolio of schemes, the compounding basis can be the difference that makes a claim worth bringing.
| £250,000 held for eight years at 5% | Simple | Compound | Difference |
|---|---|---|---|
| Year 1 | £262,500 | £262,500 | £0 |
| Year 2 | £275,000 | £275,625 | £625 |
| Year 3 | £287,500 | £289,406 | £1,906 |
| Year 4 | £300,000 | £303,877 | £3,877 |
| Year 5 | £312,500 | £319,070 | £6,570 |
| Year 6 | £325,000 | £335,024 | £10,024 |
| Year 7 | £337,500 | £351,775 | £14,275 |
| Year 8 | £350,000 | £369,364 | £19,364 |
Illustrative only. Figures are rounded, assume annual compounding and a constant 5% rate, and are used to show the mechanism — not to indicate the rate, period or outcome on any actual claim.
The basis matters — and it is not automatic
Where a right to interest actually comes from
- 1.The agreement itself. Many Section 106 agreements deal expressly with interest on sums that fall to be repaid, often at a stated margin over a named bank’s base rate. Where there is such a clause it governs, and whether it runs simple or compound is a question of how it is drafted. This is the first thing we look for.
- 2.Statutory interest in proceedings. If a claim is issued, the court has a discretion to award interest under section 35A of the Senior Courts Act 1981 or section 69 of the County Courts Act 1984. That jurisdiction is for simple interest.
- 3.Compound interest beyond those routes is not a given. Since the Supreme Court’s decision in Prudential Assurance v HMRC in 2018, there is no general common law entitlement to compound interest as restitution for the use of money. It remains available in defined situations — most obviously where the contract provides for it, and in equity in cases such as breach of fiduciary duty. Any claim advanced on a compound basis therefore has to be grounded in the drafting or the particular facts, not assumed.
Which basis applies to your schemes depends on the wording of each agreement. Establishing that is part of the free audit, and we will tell you plainly where interest runs simple.
Fees
You pay from what we recover, not from your budget
The initial portfolio audit is free. If we go on to pursue a claim and it does not succeed, there is no recovery fee. If it does succeed, our fee is deducted from the sum recovered before it reaches you.
Stage one
Initial portfolio audit
No charge, and no obligation to instruct us afterwards.
Stage two
Recovery
A success fee of 35% of the sum recovered, plus VAT, deducted from the recovery itself. Nothing to pay if the claim does not succeed.
Optional
Portfolio monitoring
A fixed monthly retainer, scoped to portfolio size. Entirely optional.
Because the fee comes out of the recovery, it is taken from money that was not on your balance sheet before we started — sums already paid over and, in most cases, written off internally years ago. Every claim is subject to legal merits, evidence, limitation and formal case acceptance. Precise terms, including the basis of the fee, VAT treatment and how any disbursements are handled, are set out in the client engagement documentation and agreed with you in writing before any recovery work begins.
FAQs
Common questions
How far back can a Section 106 claim go?
It depends on the route and the wording of the agreement, because contractual and restitutionary claims carry different limitation periods. Schemes completed some years ago are frequently still worth reviewing, particularly where the agreement set a period within which the authority had to spend the money. Part of the free audit is establishing where limitation stands on each obligation.
Do we need the original agreements?
It helps, but it isn’t essential to start. If your files are archived or incomplete, we can usually work from the planning references and obtain what is needed from the local authority record.
Will this sour our relationship with the authority?
It’s a fair concern and it shapes how we work. Most Section 106 matters turn on the correct application of an agreement rather than a dispute about principle, and are resolved through correspondence. Strategy is agreed with you before anything is sent, and you decide how far a matter goes.
What if the authority says the money is committed but not yet spent?
That is a common response, and whether it answers the point depends on what the agreement actually requires — commitment and expenditure are not always the same thing under the drafting. It is one of the first things we test.
Is interest on top of the contribution, and does it compound?
Interest is claimed for the period the authority held the money, and on a historic contribution it is often the larger part of the claim. Whether it runs simple or compound depends on the agreement: many deal with interest expressly, and where they do, the drafting governs. Compound interest is not automatic outside that. We set out the position on your specific agreements as part of the audit.
Also worth reviewing
Other recovery areas
Book your free audit
Tell us about the portfolio
A short, confidential conversation is enough to tell whether a full review is worth your time. No charge for the first-stage audit, and no obligation to instruct us afterwards.