In reply to toasted:
> What should be my next step? Can I take legal action against the dealer for not returning my deposit (£300)? What sort of timescale would this process involve?
Not a legal expert, but I have used small claims successfully to get a refund on a £3,000 mountain bike. Write them a letter telling them you want a refund, give them a date by which you want a response (maybe 2 weeks or so from the date of the letter), and tell them you intend to use small claims if you don't get your deposit back. I think it's likely you'll get your money back.
EDIT: I didn't have to go to court, they folded straight away and refunded my cost of filing for small claims court also.
Post edited at 21:22