The DVLA has revised its official policy on trade plates following lobbying from the Used Vehicle Industry Group (UVIG) over worries about dealers using untaxed ex-demos and pre-registered cars.
Under the old policy, dealers could not use trade plates on cars were they were the registered keeper of the vehicle, such as with ex-demonstrators or pre-registered cars.
Dominic Threlfall, managing director of Pebley Beach Group and a member of the UVIG, said: "To test drive these cars you officially would have to tax them. The reality being a lot of dealerships were not aware of this, and those that were ignored it and potentially left themselves open to prosecution.
"After significant canvassing, we are now able to transfer our own cars into 'trade' and then used trade plates on them.
"It seems a small change, but it will keep dealerships legal."
The DVLA's update states that dealers should inform it online when they're transfering a vehicle into sale stock, and they'll no longer be registered as the keeper "and the vehicle will be notified as transferred out of your business, or to another section of your business, as trade stock for sale. The trade plates can then be used to test drive the vehicle by a prospective buyer."
Threlfall said the UVIG has members representing trade associations, motor auctions, dealerships and finance and leasing companies, and one of its aims is to help the industry optimise the use of DVLA systems, which are very consumer focused and can be quite an administration burden for dealerships.
He believes the DVLA will pay closer attention to cars transferred into trade in the future, as vehicles between owners might be transferred multiple times between traders and it is difficult for DVLA to know exactly where they are at any point.
If parking or speeding infringements occur that creates an issue for the DVLA and dealerships, said Threlfall.