Value Added Tax Act 1994 section 55C

Deposit schemes: value of supply

Section 55C explains how deposit amounts under designated deposit schemes are treated when calculating the value of a taxable supply for VAT purposes.

• The section applies where a taxable person makes a taxable (but not zero-rated) supply of goods and a deposit amount is payable in relation to those goods.
• A "deposit amount" is a sum added to the price of goods under a designated deposit scheme, which must be repaid if the scheme's repayment conditions are met.
• The deposit amount is excluded from the consideration when calculating the value of the supply for VAT purposes.
• This means VAT is charged only on the underlying price of the goods, not on the refundable deposit element.