How R&D Tax Relief Supports the World’s First Cargo Drone Airline – Dronamics Case Study
Executive Summary
Dronamics, a UK based aeronautical engineering company, are on a mission to revolutionise the logistics industry by supplying the world’s first cargo drone airline, delivering advanced cargo transport mobility, powered by long-range cargo drones that save time, costs and carbon emissions.
This innovative development work necessitates substantial development costs, inclusive of advanced engineering work and programming, combined with intensive prototype design and testing. As Dronamics invest extensive time into research and development, the valuable funding received via the R&D tax credit scheme is essential to the success of their project and to fuel their continuous development work.
FI Group have been working closely with Dronamics’ lead engineers and financial teams, conducting a thorough review of their operations to help maximise Dronamics’ annual R&D tax benefit.
As a result of this funding, Dronamics are able to move ever-closer to achieving their goal in delivering a transport ecosystem with global reach, that provides same-day delivery to the most remote areas of the world at an affordable cost.
About the Client
Client Name: Dronamics Global Ltd
Industry: Aeronautical Engineering
Location: London, England.
Company Size: 150 Employees
Client Overview
Dronamics, the world’s first cargo drone airline, is on a mission to make more affordable, more efficient and more sustainable freight possible, especially for remote and underserved communities through the development of a revolutionary fixed-wing unmanned aircraft that can transport 350 kg at a distance of 2,500 km up to 80% faster, 50% cheaper and with up to 60% lower emissions than alternative modes of transport. Dronamics technology will enable same-day shipping over very long distances for a variety of industries: from pharma to food, from e-commerce to spare parts. The company’s fast-growing team includes some of the most experienced aerospace, logistics and technology experts.
The Challenge
As a pre-launch company, Dronamics are heavily reliant on investment and funding sources to propel their operations and development efforts in making the first autonomous cargo service by air commercially viable. However fluctuations in cash flow can provide limitations in delivering a continuous R&D program.
By claiming R&D tax credits, Dronamics can alleviate the financial burdens of their research and development activities thereby improving cash flow and enabling further investment in the cutting-edge work they do.
To achieve commercial success Dronamics aim to ensure the autonomous cargo drone has a flight range long enough, carrying a substantial payload, in order to offer a reliable mobility solution that supersedes alternative market options. To achieve this Dronamics are required to invest extensive time and effort to develop advanced autopilot systems, reliable and safe structural aero engineering solutions through continual design work, problem solving and flight tests.
However, accessing R&D tax credits, navigating the ever-changing R&D tax guidelines, can be challenging and time consuming, particularly due to recent changes in tax relief regulations complicating the application process. This complexity makes it difficult for clients such as Dronamics to fully understand how to apply for the relief to which they are entitled and maximise the tax relief available to them.
The Solution
FI Group, a specialist in R&D tax credits, harnessed their extensive knowledge and expertise to identify Dronamics’ qualifying R&D activities including development of a novel autonomous navigation and piloting system, innovation in lightweight materials and structural design, and highlighting complex technological challenges related to flight efficiency and safety.
In conjunction with a comprehensive financial review of the associated costs, FI Group were able to produce a high-quality technical narrative and full claim report in line with Dronamics’ internal deadlines, whilst ensuring compliance with HMRC’s guidelines and maximising potential benefit.
By providing tailored guidance on documentation and compliance, FI Group UK can streamline the application process and minimise the risk of errors or delays. Furthermore this valuable funding enables Dronamics to focus on innovation and alleviate staff time and stress.
Results and Benefits
Client Testimonial: “We engaged FI Group for our 2023 UK R&D Tax claim and were thoroughly impressed with their professionalism and expertise. Their team of engineers conducted detailed meetings with our R&D team leads, producing a comprehensive technical report that gave us greater confidence in the claim. By managing the entire process, FI Group significantly reduced the workload on our finance team, allowing us to focus on core activities. The claim was successful, with no issues raised by HMRC, highlighting the thoroughness and accuracy of their work.
What stood out was their proactive in-year review process. This approach has meant that we are now months ahead on our next claim, as the technical information has already been obtained during the year. This ensures our future claims are based on up-to-date and more reliable technical data, giving us even greater assurance.
Their deep understanding of R&D tax relief and commitment to quality were evident throughout the engagement, and we would highly recommend their services to other businesses.”
Conclusion
FI Group have become an invested partner continuing to advise Dronamics on everything R&D tax, carrying out a mid-year review to align with Dronamics activities and completing the R&D tax claim process on their behalf to increase their annual funding further supporting their cutting-edge development work and ultimately help achieve their goal.