Corporation Tax Group Payment Arrangements: one company can pay for the group

A Group Payment Arrangement lets eligible companies in a Corporation Tax group make joint payments through one nominated company instead of each member paying separately. The arrangement is optional and contractual, and it changes the payment machinery rather than transferring the underlying Corporation Tax liability from each participating company.

The arrangement centralises Corporation Tax payments

HMRC says one nominated company can pay on behalf of the participating companies covered by the arrangement. This can reduce administration where several group companies make quarterly instalment payments.

The companies still calculate their own Corporation Tax liabilities. The arrangement centralises cash movement, not the legal tax computation.

The group must enter a formal agreement with HMRC

HMRC requires a signed Group Payment Arrangement contract. The application should be sent at least one month before the first payment is due for the relevant accounting period.

Not every group company has to participate, but one company can be included in only one arrangement for an accounting period.

One company acts as the nominated payer

The nominated company makes payments to HMRC for the whole arrangement. Treasury therefore needs intercompany funding from participating companies or another documented method for financing the central tax cash.

Keep the internal contribution schedule even though HMRC does not require a company-by-company breakdown with each payment.

Large companies can be paid through group quarterly instalments

HMRC's August 2026 manual says the nominated company makes quarterly instalments based on the most recent profit forecasts of large companies in the arrangement and adjusts payments when forecasts change.

Non-large company liabilities are also settled under the arrangement by the normal due date under the rules.

Use the separate Group Payment Arrangement reference

HMRC issues a payment reference specifically for the arrangement. Do not use an individual company's ordinary Corporation Tax reference for the central group payment.

Keep the reference with the nominated company's treasury template and check it before each large instalment.

HMRC allocates payments once final liabilities are known

The group does not need to tell HMRC how every payment should be split between members while making the instalments. Final allocation occurs after the companies' actual liabilities are established.

Internal accounting should still track each member's tax funding so intercompany balances can be settled accurately.

Worked example: a group has four large companies each making quarterly Corporation Tax instalments. Instead of twelve or sixteen separate bank transfers through the year, the nominated company can make consolidated payments under the GPA based on group forecasts, then HMRC allocates the money after liabilities are finalised.

HMRC says the arrangement can reduce the effect of different interest rates on overpaid and underpaid Corporation Tax across the group. Treasury should still update forecasts because one large overpayment is not an efficient substitute for accurate instalments.

Use a member funding schedule showing tax forecast, cash contributed to the nominated company and final liability. That keeps group cash centralisation from creating unexplained intercompany balances.

Worked example: three large companies forecast quarterly Corporation Tax instalments of £1.2 million, £800,000 and £500,000. Under a GPA the nominated company can make one £2.5 million payment for the group using the special GPA reference, while internal schedules show each member's expected contribution.

Set intercompany funding dates several working days before each HMRC due date. The nominated company should not be waiting for subsidiary cash on payment morning while trying to send a multi-million-pound tax transfer.

Update forecasts during the year. HMRC's current manual says the nominated company adjusts group payments if profit forecasts change, so a central tax team should collect revised estimates from every participating large company.

After final liabilities are allocated, settle intercompany balances promptly. The HMRC arrangement can simplify external payments while leaving complex internal receivables if one company contributed too much and another too little.

Keep a closing-date calendar for the arrangement. HMRC's process has a point after which later changes in a participating company's liability become that company's own responsibility rather than part of the group arrangement.

Review group membership after acquisitions and disposals. A company can only be included in one GPA for an accounting period, so treasury and tax teams should update participation deliberately rather than assume the current list follows the corporate structure automatically.

Use the GPA reference only for payments inside the arrangement. A tax liability arising after the HMRC closing date or outside the participating-company list can need payment under the individual company's normal Corporation Tax reference.

Keep the nominated company's cash forecast separate from the group's tax forecast. The group may owe £10 million, but the nominated payer still needs that money transferred into its own bank account before HMRC's due date.