Group Payment Arrangements for Corporation Tax
Check how to apply for a Group Payment Arrangement to save money by making joint payments of Corporation Tax.
Group Payment Arrangements can reduce the administration when making many individual payments. It might also reduce the overall interest charges that the group needs to pay.
Only certain groups will qualify for Group Payment Arrangement. To set one up, you need to complete a legal agreement. Your payments must also meet certain conditions.
How it works
A Group Payment Arrangement is an optional contract that you may enter into, if your company is a member of a group that meets the necessary conditions.
You do not need to include all possible eligible companies in a Group Payment Arrangement. You can have more than one arrangement to cover different sets of companies within the group. However, one company can only be included within one Group Payment Arrangement for an accounting period.
How long it lasts for
When you set up a Group Payment Arrangement it stays in place until:
- you tell us you no longer want it
- we cancel it if there have been payment problems
Who can make the payment
The companies in the arrangement nominate one of the members to make the payments on behalf of all the companies. 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.
Who can apply
Companies that can enter Group Payment Arrangement are parent companies and their 51% subsidiaries (any companies of which it is the beneficial owner of more than 50% of the ordinary share capital). The 51% subsidiaries of those subsidiaries, and so on, can also be included in the group.
The definition of a group for the purposes of Group Payment Arrangements is not necessarily the same as that used by HMRC for other aspects of Corporation Tax, other tax areas, or other government departments and agencies.
Find out more about Group Payment Arrangements in the HMRC manual.
Before you apply
For a Group Payment Arrangement, you must meet the following conditions:
- the companies must be up to date with their filing and payment obligations
- the nominated company must be resident in the UK but this requirement does not apply to the other companies in the group — UK subsidiaries of overseas companies and UK branches of non-resident companies can be included in an arrangement, and companies qualify even though their 51% connection to the rest of the group is through an overseas parent
- the 51% subsidiary relationship between members of the group must exist at the time the Group Payment Arrangement document is signed, if it later turns out that this was not the case for any of the participating companies, those companies will be removed from the arrangement
- the participating companies have to make up accounts to the same date as the nominated company
- only companies that are active (for example trading) for Corporation Tax purposes should be included in a Group Payment Arrangement
You must tell us when a company leaves the group:
- if it has been sold for example, if you do not then the company will have to stay in the Group Payment Arrangement until we are told and remove it, you could be responsible for its tax liability even though it has left the group
- but money has already been paid into the arrangement on its behalf, so we can allocate the payments correctly
Read paragraph 97420 Company Taxation Manual to find out about which companies can participate in a Group Payment Arrangement.
Advantages of a Group Payment Arrangement
Simplified administration
With a Group Payment Arrangement, you only need to make one payment of Corporation Tax to us, no matter how many companies are in the group. We will give you a special payment reference and you must use this to make payments. You should not give the reference normally used by the individual companies.
Reduced interest charges
Some or all members of the group will normally have to pay Corporation Tax by instalments. At least 4 payments will be needed for each accounting period. Your payments will have to be based on estimates of your profits. 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 us.
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 when 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 we charge on an underpayment is higher than the interest on an overpayment. This can result in a net saving of interest for the group.
We will calculate if the payments allocated to each company result in interest payments to or from us once the actual figures for the accounting period are known.
How to apply
To apply for a Group Payment Arrangement, you must first make sure that all the conditions specified in this guidance are met, or will be met, by the appropriate dates.
When completing your agreement, you should not fill in the date on page 1. This will be completed by HMRC.
You can read paragraph 97440 Company Taxation Manual to find out how to complete the Group Payment Arrangement document.
You need to:
-
Complete an which is a written legal contract between you and HMRC.
-
Get the director of the nominated company to sign the document.
-
Send the agreement to us at least one month before the first payment is due for the accounting period — that is 6 months and 13 days after the start of the Corporation Tax accounting period.
Make a payment
Payments made under a Group Payment Arrangement must be paid using the separate payment reference that HMRC will issue specifically for the Group Payment Arrangement.
You can read more about it at pay your Corporation Tax bill.
Estimating what to pay
Each payment under a Group Payment Arrangement is a single payment to us on behalf of the whole group.
You do not need to:
- make individual payments for each member
- provide a breakdown to explain what the contribution is from each member
- tell us 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
Repayments of overpaid Corporation Tax
We will make repayments by electronic transfer to your bank account if one is due, under the Group Payment Arrangement. If you think a repayment is due, the nominated company should either write to us on company headed notepaper or submit a request electronically including the company logo in the message.
You’ll need to tell us:
- why you think a repayment is due
- the bank account name, bank account number and sort code you want the repayment paid into
- which of the group’s payments we should use to make the repayment
Reporting a change in contact details
You must report changes to the Group Payment Arrangements Team including:
- contact names
- addresses
- telephone numbers
End of a period covered by a Group Payment Arrangement
A Group Payment Arrangement closes for an accounting period at whichever is the later of the:
- date when all companies covered by the arrangement have either filed their Company Tax Returns or had their Corporation Tax payable ‘determined’ by us
- last filing deadline date for the Company Tax Returns
Notice of closure
After the Group Payment Arrangement closes for a period, we will issue ‘Notice of closure’ (form CT630) to the nominated company. This will show 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 pay any outstanding tax due, or advise how it wants to dispose of any net overpayment. It will also advise, within 30 days, how the payments are to be apportioned between the participating companies. If you do not do this, we will send you an Apportionment Notice (form CT631) showing you how we intend to allocate the payments, based on the actual figures due for each company. This will be in accordance with the Company Tax Returns and determinations.
You can read more about what happens at the end of a Group Payment Arrangement in the Company Taxation Manual paragraph 97560.
How to complete form CT630
Read Group Payment Arrangements CT630 and CT632 notes, or contact the Group Payment Arrangement Team if you need help completing form CT630.
Completed CT360 must be sent to the Group Payment Arrangement Team.
More information
You can also find out information using the following HMRC online services:
- the official HMRC app
- your business tax account
Updates to this page
Last updated 9 August 2024 + show all updates
-
Reporting a change in contact details section has been updated to tell users how to report changes to contact names, addresses and telephone numbers.
-
First published.