Immediate VAT reclaim opportunity for motor dealers

Nigel Roberts

Nigel Roberts

VAT Director and Head of VAT & Duty

HMRC has confirmed that motor dealer deposit contributions are not subject to VAT and have invited claims for overpaid VAT from dealers who have historically treated such contributions as subject to VAT. Such claims could be for 20% of deposit contributions paid, can be retrospective for up to four years and will normally also attract interest.

There has been uncertainty regarding the VAT treatment of dealer deposit contributions. Dealerships may either have accounted for VAT on the gross sale price of vehicles including the dealer deposit contribution or reduced the taxable value of the vehicle by the amount of the contribution. Dealerships should now review their VAT position and consider whether a claim for overpaid VAT should be made to HMRC.

Not all dealers will be eligible to claim and not all deposit contributions will be eligible. HMRC will deal quickly with claims which meet all the conditions in their new guidance, and reject those which are not clearly compliant.

How can we help?

Here at Johnston Carmichael, our VAT team fully understand the issues and have already submitted claims. We are well place to help dealers obtain full repayment of their claims.

For more information, contact Nigel Roberts at: or Paul McGonigal at