Group payment arrangements

By Tolley in partnership with Jackie Barker of Wells Associates

The following Corporation Tax guidance note by Tolley in partnership with Jackie Barker of Wells Associates provides comprehensive and up to date tax information covering:

  • Group payment arrangements
  • Definition of group
  • Applying for group payment arrangements
  • Amendment or termination
  • Making payments
  • Operation of group payment arrangements
  • Change in contact details

This note provides details of what group payment arrangements are, and when and how they are applied for corporation tax purposes.

Broadly, group payment arrangements allow a group of companies to apply to make joint payments of corporation tax. The company that makes all the payments of corporation tax on behalf of the group is called the ‘nominated company’ and effectively acts as the group ‘bank’. All other members are called ‘participating companies’.

Entering into these arrangements provides an advantage as only one payment of corporation tax is due on behalf of all the group members. This means that the administration is much more straightforward, particularly in the context of quarterly instalment payments of corporation tax. Such an arrangement also avoids the complications of having to deal with offsetting group members’ corporation tax overpayments against other members’ underpayments. Finally, entering into a group payment arrangement can help to minimise interest costs arising on late payment of tax, assuming the nominated company makes payments on time.

TMA 1970, ss 59F-59H
Definition of group

The definition of a group for group payment arrangement is wider than that used for other purposes such as group relief.

Groups that are eligible to participate in these arrangements are parent companies, its 51% subsidiaries, the 51% subsidiaries of those subsidiaries etc.

There are also various other conditions that must be met which include the following:

  • at least one company in the group must be large or very large and therefore liable to quarterly instalment payments. See the QIPs ― when do they apply guidance note
  • the nominated company must be UK resident but there is no requirement for any of the other companies within the arrangement to be UK resident, even the parent company

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