Definition of Research and Development

(Definitions of Research and Development (R&D) which are accepted internationally are published in the Frascati Manual 6th edition (see chapter 2 pages 30-48). 

R&D comprises creative work undertaken on a systematic basis in order to increase the stock of knowledge, including knowledge of man, culture and society and the use of this stock of knowledge to devise new applications.  R&D is a term covering three activities: basic research, applied research and experimental development.

  • Basic research is experimental or theoretical work undertaken primarily to acquire new knowledge of the underlying foundation of phenomena and observable facts without any particular application or use in view.
  • Applied research is also original investigation undertaken in order to acquire new knowledge.  It is, however, directed primarily towards a specific practical aim or objective.
  • Experimental development is systematic work, drawing on existing knowledge gained from research and/or practical experience that is directed to producing new processes, systems and services, or to improving substantially those already produced or installed.

The Frascati Manual also lists situations where certain activities are to be excluded from R&D.  These include routine testing and analysis of materials, components, products, processes, feasibility studies, routine software development and general purpose data collection (see Page 30 above), but note that PhD is accepted as R&D.

A VAT Notice further qualifies the definition of research.  It is the intention at the beginning of a project that will determine whether work should be classified as research.  A mere confirmation of existing understanding is not research.  The fact that a project may have a specific commercial application does not necessarily prevent it from being classified as research.  The VAT Notice provides examples of work, which do not normally qualify as research for taxation purposes:

The VAT definition (See section 3.7) of scientific research for tax purposes is limited to activities in the fields of natural or applied science, that is to say science and technology. Frascati also covers activities such as research in social sciences and the humanities which fall outside those bounds and will continue to be excluded from any definition of R&D activity which applies for tax purposes.

  • Management consultancy and business efficiency advice;
  • Collection and recording of statistics, without accompanying collation, analysis and interpretation;
  • Market research and opinion polling;
  • Writing computer programmes;
  • The Routine testing, analysis of materials, components and processes.

Some of these activities will, however, qualify if they are part of a larger research project where there is a need, for example, to devise a specialist software programme before the main tasks of the project can be carried out.   Additionally, if the project is in social sciences and/or humanities departments but is part of a larger programme in the qualifying fields then it can be argued that it counts for tax purposes.


Consultancy work represents the provision of expert advice and work which, while it may involve a degree of analysis, measurement or testing, is crucially dependent on a high degree of intellectual input from the HEI to the client (commercial or non-commercial).  Such work is usually paid for at a market rate, and may deliver stronger IP rights to the business client than would apply in a collaborative research relationship.

Unlike Research work, Consultancy work does not have as its prime purpose the generation of new knowledge. However, as with Research work Consultancy work does not allow for the transfer of Background Intellectual Property Rights (IPR) which under the terms and conditions of employment belong to UCL and not the member of staff (see UCL Intellectual Property Framework Policy).

These activities are administered through UCL Consultants Ltd

Clinical Trials

Clinical trails may be classified as research (Phases 1,2 and 3) where there is genuine uncertainty within the definition of the licensing authority about safety, efficacy, dosage or contra-indications of the product being assessed.  Not all Clinical trails qualify as research, although all phase 1 to 3 do.  The later stages of some clinical drug trials (Phase 4) may be more akin to ‘routine testing’ (as defined in the Frascati Manual (above), particularly where the original research has been completed by a drug company or other contractor.


A Donation occurs when there is a philanthropic ‘giving’ of the gift to UCL without any strings being attached by the source (individuals; trusts; foundations; ) and there is no direct or in-direct benefit given to that source (Report, Access to IP, etc.).  This will not normally qualify as research income – however if it must be used for research or providing research facilities and as long as it is within the definition of the Frascati Definition it may qualify accordingly.

Statistical Returns

Quality Research (QR) element funds from HEFCE are based on the results of the Research Assessment Exercise and yearly updates on certain types of funding;

  • Charity funding that is open to more than one institution and is subject to peer review.
  • UK Industry Research income.
  • Numbers of Research Staff and Students.

This document is produced for guidance purposes only – it is the responsibility of the lead investigator or supervisor to establish the status of their project and have it set up accordingly.

Mark Burgess
Assistant Director (e-Business, Special Projects, Post-Graduate Accounts and Credit Control)

Page last modified on 01 oct 15 09:35