Your assistance in untangling the following is appreciated.
A VAT registered client enters into an agreement with a third party to develop a film. The third party gives the Client £x in order to get on with the task. Some time later (9 months or so) the project begins to gather pace and the scope of the project is better understood. At this point the client and the third party enter into an agreement, whereby in return for the £x, the third party is paid x% on the future sales of the film.
My question is what is the tax point for VAT? Is it the time the £x was received by the client from the third party, or is it the time the royalty agreement is signed? The third party does not register for VAT until the royalty agreement is signed.
Many thanks in advance for your comments