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You're within your rights to grass your neighbours up to the council planners, as they've deviated from the plans against which their PD Certificate was granted. But this would only serve to destroy your relationship with them, and unlikely to achieve any change as what they've built does seem to still fall within PD.
Also, unless you've given explicit consent for modification of your property as part of your party wall agreement, then they've fallen foul of that as well. Depending on how your chat with the neighbour goes, I'd suggest getting a surveyor out at their expense to assess the situation.
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According to those drawings the boundary line is the face of the chimney stack on your side, and the stack is entirely within their demise. They’ve built what was drawn. Whether the boundary line on the drawing is right is the question.
Does mean they’ve made themselves 100% responsible for that stack.
The drawing excerpt is not particularly clear; can you post the whole thing? The wording around the 300mm setback is pretty unambiguous, for sure.
Have you spoken to the neighbours and their builders about this? That would be my first port of call. The neighbours themselves may not even be aware that the builders have done this.
It is a bit of a pisstake though, I would be miffed.