RCB/7/18 VAT—motor dealer deposit contributions
Revenue & Customs Brief, Issue 7. 17 July 2018
This brief explains HMRC's policy on the VAT accounting treatment of promotions where payments are said to be made by motor dealers to finance companies on behalf of the end customer. These are often but not exclusively referred to as dealer deposit contributions (DDC) in the motor retail trade.
You should read this brief if you're a:
— retailer of new and used motor vehicles
— company financing the sale to the final customer
— VAT registered business that has purchased a vehicle with a DDC
HMRC is aware that motor dealers who operate DDC type promotions have adopted different VAT accounting treatments. This brief sets out HMRC's policy, which should be applied consistently across the industry going forward and explains how dealers, finance companies and VAT registered customers should make error corrections for past periods.
Manufacturer deposit contributions
This brief is not concerned with manufacturer deposit contributions (MDC), which are promotions where the manufacturer or importer of the vehicle make a contribution to reduce the amount that the customer has to pay for the