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»Ê¹ÚÌåÓýapp term deposit is generally used to describe any payment received in advance of the making of a supply. Commonly, deposits are intended as a demonstration of good faith on the part of the customer or to enable the supplier to assist in financing the supply.

Under the margin schemes, no VAT is due until the amount received from a customer exceeds the purchase price of the goods concerned. In that case, VAT must be accounted for to the extent of this “margin�.

»Ê¹ÚÌåÓýapp time at which the VAT will become due on any balance of the purchase price will be governed by the normal tax point rules. VAT must then be accounted for to the extent of the total margin on the full selling price of the goods. This will ensure that VAT is accounted for on the full margin.

Further information about deposits is contained in VATTOS and VATSC.