ERSM100400 - University Spin-outs

Definitions: ‘Research institution’

Under ITEPA03/S457 this can be:

1. any publicly funded university or other institution as defined in section 41(2) of the Higher Education Act 2004 or
2. any institution that carries out research activities otherwise than for profit and that is neither controlled nor wholly or mainly funded by a person who carries on activities for profit.

There is provision for this definition to be amended if a RI comes to light that is not covered by the legislation.

Examples 13

The following examples illustrate the operation of these rules:

• A medical charity sets up a subsidiary for research. This will be a RI within s457(1)(b);
• A multinational pharmaceuticals group has several research subsidiaries. They often work in conjunction with university research departments. None of the subsidiaries will qualify as a RI because they are controlled by a person (including, as in this case, a company) which “carries on activities for profit”.
• A French university has potentially commercial research. It will be a RI. This may be relevant if, for example, a person involved in the research is from the UK on short- term secondment or the spin-out activity is part located in the UK for whatever reason.