Can I use move Inter Co AC's balance to DLA AC?

Can I generate a journal to move Inter Co AC's balance to DLA AC?

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My client has several companies under his name and he is the sole director. Normally, he will transfer the fund to each  other as the inter co loan if the company is lack of fund. 

Now company A has lent £300k to company B as the inter co loan, which shows on the nominal code ledger. Can I generate a journal to move this move to DLA, so company B owns DLA £300k? 

Replies (6)

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By Ruddles
21st Feb 2024 10:50

Why?

And, with respect, while it seems that English is not your first language I would suggest that you try and re-word the question. I can make some sense out of it, but only by making certain assumptions, so I may be wrong.

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By Tax Dragon
21st Feb 2024 11:01

Are you the bookkeeper? Has the client asked you to do this?

Before doing so (I'm sure you 'can'), you might want to have a conversation about the tax consequences. If you're not engaged to advise on tax, you might want to suggest your client talks with his/her/their tax advisor before you process the journal.

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By johngroganjga
21st Feb 2024 11:17

You can only do that if you make an equal and opposite entry in the books of Company A (to keep the inter-company balances in agreement) which will make the director a debtor of Company A. I have no idea what the point of doing such a thing would be but, as Tax Dragon says, the tax implications of the loan to the director from Company A need to be considered carefully first.

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By Duggimon
21st Feb 2024 12:28

If I understand your question correctly (which possibly I don't) the director is inputting personal funds into one or another of his companies but recording it as inter-company loans, despite the funds not coming from that other company.

If that is a correct interpretation, your suggested journal is only fixing the director's mistake so I see no issue with it.

If the money in company B actually came from company A and you want to change it to director's loan then, as John said, you need to create the opposite entry in company A as the director has taken on the debt and now owes company A £300K while being owed £300K by company B.

It's very hard to tell from your first sentence which of the two scenarios is correct though.

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Replying to Duggimon:
By johngroganjga
21st Feb 2024 13:41

Are we not told in the question that "company A has lent £300k to company B".

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By Paul Crowley
21st Feb 2024 15:23

Look at the reasons

Look at matching the companies

Watch out for potential insolvencies and missing dividends on tax returns
S455 tax could pop up without people realising

Do not be the person that fiddled the loans to keep the director happy

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