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From a Planning point of view, there is nothing to stop a development being requested (and granted) that goes right up to a boundary. Indeed I had a house where the garage was hard up against the neighbours plot and I had a right of access to their land to maintain it. However to make things easier, most Planning requests will leave a gap, not least because, from a Building Regulations viewpoint, foundations usually have to be wider than the wall they support and one can't build the foundations on another person's land.
The answer to the second part is as the posting above. Planning Applications must allow for consultation with impacted parties and as far as I know, this still means that those who have a boundary with the Applicant get notification by post.