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Where a 'stock in trade' car is made available for private use for no consideration, a deemed supply is made (see V3.242), the value of which is determined on the basis of the cost to the person making the supply (see V3.212) or on the basis of scale charges agreed with the motor trade (see V3.242). However, where a nominal charge is made, VAT is due only on that charge, unless the provisions set out in V3.162 apply (ie the relevant persons are connected) or HMRC makes a direction as described below.

For the meaning of 'stock in trade' car, see under 'Stock in trade—conditions' below.

In March 2004, HMRC announced that¹:

By making a nominal charge of as little as £1 per year to their employees for the use of a company car, a legal loophole means that motor traders only have to pay VAT of 17.5% on the £1, a considerable reduction in the VAT payable. The Government intends to change the law so that in appropriate