Group Payment Arrangements allow groups of companies to make joint payments of Corporation Tax. They can reduce the administration associated with making a large number of individual payments.
A Group Payment Arrangement might also reduce the overall interest charges that the group needs to pay.
Only certain groups will qualify for Group Payment Arrangements, and to make one, you need to complete a legal agreement. Your payments must also meet certain conditions.
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Companies that can enter a Group Payment Arrangement are a parent company and its 51 per cent subsidiaries (any companies of which it is the beneficial owner of more than 50 per cent of the ordinary share capital). The 51 per cent subsidiaries of those subsidiaries, and so on, can also be included in the group.
This definition of a group for the purposes of Group Payment Arrangements is not necessarily the same as that used by HM Revenue & Customs (HMRC) in relation to other aspects of Corporation Tax or to other tax areas, or by other government departments and agencies.
More about which companies can participate in a Group Payment Arrangement
With a Group Payment Arrangement, you only need to make one payment of Corporation Tax to HMRC, no matter how many companies are in the group. But you must make this payment using the special payment reference provided by HMRC, not the reference normally used by the individual companies.
As some or all members of the group will normally have to pay Corporation Tax by instalments, at least four payments will be needed for each accounting period, starting mid-way through the accounting period. So your payments will have to be based on estimates of profits. It follows that the payments you make are unlikely to be exactly right and a ‘top-up' payment or an overall repayment may be needed. There may also be interest due to or payable by HMRC.
A Group Payment Arrangement allows a group to retrospectively allocate the payments it has made against the tax liabilities of its members. The group can do this after all the member companies' tax liabilities are known. This means the group can allocate its payments in a way that benefits it most. Because the interest rate that HMRC charges on an underpayment is higher than the interest they pay on an overpayment, this can result in a net saving of interest for the group.
Once the actual figures for the accounting period are known, HMRC will calculate whether the payments allocated to each company give rise to interest payments to or from HMRC.
A Group Payment Arrangement is an optional contract that you may be able to enter into with HMRC, if your company is a member of a group that meets the necessary conditions.
You don't need to include all possible eligible companies in a Group Payment Arrangement, and you can have more than one arrangement to cover different sets of companies within the group. However, any one company can only be included within one Group Payment Arrangement for an accounting period.
When you set up a Group Payment Arrangement with HMRC it remains in place until you tell HMRC you no longer want it or, if there have been payment problems, HMRC decides not to continue it.
The companies in the arrangement nominate one of the members to make the payments on behalf of all the companies within the arrangement. This is known as the 'nominated company'.
Although the nominated company is responsible for making the payments, the liability for Corporation Tax - how much is due, and when - is still the responsibility of the individual companies covered by the arrangement.
If you wish to apply for a Group Payment Arrangement, the following conditions apply:
Trading and non-trading for Corporation Tax explained
More about which companies can participate in a Group Payment Arrangement
To apply for a Group Payment Arrangement, you must first make sure that all the conditions specified in the section in this guide on the conditions for Group Payment Arrangements are met, or will be met, by the appropriate dates.
You need to complete a Group Payment Arrangement document which is a written legal contract between you and HMRC. The document needs to be signed by a director of the company nominated to make the payments on behalf of the group. You must send it to HMRC at least one month before the first payment is due for the accounting period to be covered by the Group Payment Arrangement. That is six months and thirteen days after the start of the Corporation Tax accounting period.
Send your completed Group Payment Arrangement document to:
Group Payment Team
Debt Management & Banking
HM Revenue & Customs
St Mungo's Road
Cumbernauld
GLASGOW
G67 1YZ
When completing your agreement, you should not fill in the date on page 1. This will be completed by HMRC.
Download a Group Payment Arrangement document (PDF 69K)
More about the Group Payment Arrangement document and how to complete it
Payments made under a Group Payment Arrangement must be paid:
When you apply for a Group Payment Arrangement, you must tell HMRC which payment method you'll use. You can use Bacs Direct Credit, CHAPS or Bank Giro.
For more information on how to make payments under a Group Payment Arrangement, follow the link below.
If a repayment is due under the Group Payment Arrangement, HMRC will make it by electronic transfer to your bank account. Any time a repayment is due the nominated company should write to HMRC on company headed notepaper and tell them:
Each payment under a Group Payment Arrangement is a single payment to HMRC on behalf of the whole group. You don't make individual payments for each member, nor do you provide a breakdown to HMRC to explain what the contribution is from each member. You don't have to tell HMRC how the payments are to be apportioned between the members until after all the tax liabilities for the members of the arrangement have been established.
If the person HMRC contacts for the group or their telephone number changes, you must tell HMRC. You can do this by calling the Group Payment Team on Tel 01236 785499. This line is open from 8.00 am to 5.00 pm Monday to Thursday and 8.00 am to 4.30 pm on Friday.
If the address for a Group Payment Arrangement changes you must tell HMRC by writing to:
Group Payment Team
Debt Management & Banking
HM Revenue & Customs
St Mungo's Road
Cumbernauld
GLASGOW
G67 1YZ
A Group Payment Arrangement closes for an accounting period at whichever is the later of:
After the Group Payment Arrangement closes for a period, HMRC will issue a 'Notice of closure' (form CT630) to the nominated company, showing the payments made and the Corporation Tax due for each participating company at the date of closure.
The CT630 notice will ask the nominated company to:
If you need any help completing your form CT630, please contact the Group Payments Team on Tel 01236 785499.
Find further information on what happens at the end of a Group Payment Arrangement
Find detailed guidance on Group Payments Arrangements
Go to HMRC guidance notes on Group Payments Arrangements (PDF 260K)
What to do if you can't pay Corporation Tax
Instalment payments of Corporation Tax
