Inter-company Debtors

This Current Assets code records inter-company debtors. As an asset account, it normally carries a debit balance: debit entries increase the balance and credit entries decrease it.

Real-world examples

This code doesn't really vary by industry — it depends on how the group is structured, and in particular whether the companies involved are registered as a VAT group, which matters more than what the group happens to sell.

Group with a VAT group registration

Where a holding company recharges a trading subsidiary for shared services — admin, premises, management time — and the two are registered as a VAT group, the recharge is disregarded for VAT purposes: no VAT is charged, and the whole amount simply moves between 1104 in one company's books and the matching creditor code in the other's, with nothing posted to 2201 or 2200.

Group without a VAT group registration

The same recharge between group companies that aren't VAT-grouped is treated as a normal supply — VAT is charged, the receiving company's 1104 balance includes that VAT, and it's accounted for through 2201/2200 in the usual way. Missing this distinction is a common error in growing groups that add a new subsidiary without checking whether it should join the existing VAT group registration.

Property or SPV group

Where a property is held in a separate group company, money advanced to fund a purchase or renovation is usually a loan rather than a trading debt — often carrying interest, and disclosed quite differently to a trading recharge, even though both can technically sit in 1104 if the chart of accounts isn't set up to separate them.

Commonly confused with

Because code 1103 (Prepayments) sits right next to this one in Current Assets, it's a common mis-posting target. Code 1104 is specifically for inter-company debtors, while 1103 covers prepayments — similar in nature, but keeping them separate is what makes the current assets section of your management accounts meaningful rather than a single lumped total.

What a mis-posting here costs you

Because Inter-company Debtors sits within Current Assets, an error here overstates or understates working capital on the balance sheet rather than affecting reported profit — it won't move the bottom line, but it can make the business look more, or less, liquid than it actually is.

Other codes in Current Assets