Thursday, 13 March 2008

Commercial Research and Higher Education Institutions

From the JISC IPR Consultancy newsletter:

"Her Majesty's Revenue's and Customs and the Charities Commission's lawyers have issued an opinion that when the purpose of a particular piece of research carried out in a University is to enhance the profitability of a third party, then in order to avoid breaking the law, that research must be run by a spin off company of the HEI. The spin off company can then covenant its profits to the parent HEI. However, if the "commercial" research is not undertaken through the spin out company, then the HEI is breaking the Charities Act. On the other hand, if the work can be shown primarily to further the HEI, and benefits to any third party can be shown to be incidental, or only a very small sum is involved, there isn't a problem. The wording the lawyers have used was "Charity trustees would be in breach of their trusts if they decided to carry out activities that were supposed to directly further the charity's objects, but which resulted in private benefits that were not legitimately incidental. If the commercial advantage was one of the main purposes of the arrangement, then the commercial research would have to be undertaken as a taxable 'non primary purpose' trading.....In case of doubt, HMRC recommends carrying out the research through a trading company." The Charities Commission will shortly be issuing advice on this matter on its web site. "

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