MTT54210 - Administration: Payments and interest: Effect of a group payment notice
Where a member receives a group payment notice, the liability of the responsible member (the ‘relevant liability’) becomes the recipient’s ‘deemed liability’. This deemed liability includes the unpaid MTT and interest as well as interest accruing after the date of the notice.
The deemed liability is treated as having become due and payable on the same date that the relevant liability became due and payable.
Any payments made in respect of the relevant liability are also treated as having been made in respect of the deemed liability.
This is set out in paragraph 37, schedule 14 to Finance (No.2) Act 2023.
Example
A Ltd and B Ltd are members of Group AB.
A Ltd has an unpaid MTT liability of £1000 (the relevant liability). A valid group payment notice is issued to B Ltd in respect of this amount (the deemed liability).
A Ltd makes a payment of £100 in respect of its unpaid liability. This reduces both the relevant liability and the deemed liability of B to £900.
B Ltd makes a payment of £500 in respect of the relevant liability. This reduces both the relevant liability and the deemed liability of B to £400.
Effect of making intra-group payments
Where the recipient of a group payment notice makes any payment towards a deemed liability, they are entitled to recover that payment from the responsible member that was originally liable.
Payments made by the recipient of a notice towards a deemed liability are not allowed as deductions in calculating their income, profits or losses for any UK tax purposes. Similarly, if the recipient is reimbursed for making a payment towards a deemed liability, this is not treated as a receipt for UK tax purposes.
See MTT54400 for guidance on group payments and recovery of group payments.