Pioneering aviation firm lands R&D tax boost

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British microlight aircraft firm P&M Aviation designs, develops and produces the world’s most advanced flexwing aircraft.

British microlight aircraft firm P&M Aviation designs, develops and produces the world’s most advanced flexwing aircraft. They took the top nine places at the recent World Air Games, and a number of their aircraft will be flown later this year across Antarctica by former servicemen injured in conflict as part of the Flying for Freedom rehabilitation programme.

With a range of different aircraft being constantly developed, tested and obtaining CAA airworthiness approval, R&D is central to P&M’s activities, and it identified an opportunity to make savings by applying to HM Revenue & Customs (HMRC) R&D Tax Credit scheme, which provides tax relief on qualifying expenditure to incentivise businesses to innovate and develop.

Based in Marlborough in Wiltshire, P&M Aviation was the merger of the two UK flexwing firms in 2003 and has since developed a reputation for the quality and performance of its microlight aircraft, which are sold for private recreational use to clients in the UK and into 31 different countries.

R&D tax credits’ policy intent is to encourage investment in development and innovation by addressing scientific and technical uncertainties, a number of which P&M was required to confront in developing its technology. The majority of its aircraft are made to specific order and customer requirements.

Chairman Andrew Cranfield explains: “We are constantly engaged in R&D to ensure that our aircraft retain their world beating status and are continually evolving designs in order to meet customer demands and provide performance upgrades. Each aircraft is built to order, around a six fundamental designs, which entails considerable ongoing development. As with any engineering challenge, improvements in one area come at a cost elsewhere, but we work hard to optimise each characteristic as far as possible.

“This has meant that we are continuously involved in R&D activity for new designs, our existing production range as well as aircraft that are out of production. We are legally obliged to support any of the 4,000 aircraft we have produced, of any age that operates under a Permit to Fly. So there is a certain amount of ongoing R&D involved with the older aircraft when we have to find substitute parts or systems for obsolete items. In every case, there is engineering work, testing and submitting approval documentation. It can be very challenging but also satisfying in finding solutions that enables these older aircraft to continue to fly safely.

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“For the majority of modifications or new designs, we do a full theoretical analysis that then leads into prototype build and testing, followed by technical reports that are submitted for approval to the authorities before embodiment into production. This can include materials testing at the earliest stage and will always entail a flight test programme carried out by company test pilots. Effectively, we follow the same R&D process as do BAE or Boeing, or any of the larger aircraft manufacturers, and it spans right across all of our activities.”

The firm’s R&D capabilities were given their greatest test to date when it was asked to take their all composite designs and adapt it to be flown across Antarctica by eight wounded former-servicemen this winter. The challenge has been organised by Flying for Freedom, a charity primarily funded by the Royal Foundation and Help for Heroes which is aimed at inspiring and motivating the wounded and injured during their ongoing rehabilitation.

Cranfield commented: “The pilots’ requirements of the aircraft for the Flying for Freedom challenge are like no other. Firstly, the microlights will fly in freezing conditions, and so we have to incorporate an innovative in-craft heating systems to keep the pilots warm, which we think this is a first for a flexwing microlight. Ensuring that the system could operate effectively and safely under all conditions took considerable design engineering input.

“But perhaps the greatest challenge of all is the fact that the pilots themselves are severely injured and, in a number of cases paraplegic. So we’ve developed highly-bespoke flying controls to allow them to be operated by the pilots as easily and comfortably as possible. The development of these hand controls and obtaining approval was a considerable task.”

He added: “We are all very proud that, as a company, we’re supporting this wonderful initiative. A number of these pilots have suffered from post-traumatic stress disorder, often as well as life changing injuries, and for them to have the opportunity to take part in a challenge is proving to be hugely beneficial to their recovery.”

It is not only the Antarctic mission that has tested P&M’s engineering capabilities - the involvement of its aircraft at the World Air Games puts it under the scrutiny of a world-class competition. It develops aircraft especially for these games, based on an existing model, but tailored for maximum performance. At the most recent competition in Dubai in December 2015, P&M’s aircraft were used by all of the top nine pilots in the weight-shift controlled microlight category.

Cranfield continued: “As is the case in the majority of sports and pursuits, use of equipment by elite competitors provides invaluable endorsement for the manufacturers, and we’ve certainly witnessed that effect from the International competitions our aircraft are involved in. For that reason, we place a great deal of emphasis on optimising our aircraft to achieve improvements that might seem minor but, in the arena of competition, can mean the difference between coming first and coming second.”

Further boosting its marketing efforts, P&M’s craft also hold numerous prestigious world records, including flexwing speed records, the first microlight to fly around the world, and the first flexwing to be flown over Mount Everest.

R&D Tax Credits

In 2013, P&M began to explore the potential benefits of the R&D Tax Credit scheme, administered by HMRC, working with specialist R&D tax consultancy ForrestBrown to manage and submit its claim.

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Cranfield said: “I was aware that as engineers, R&D is a large part of what we do, but until we started to record everything officially, as is required when submitting a claim, I hadn’t realised just how much we were doing. It highlighted the fact that we hadn’t done any of this kind of analysis in the past.

“As a result of continuing with the R&D tax credit programme year-on-year, we’re now recording our R&D far more robustly as it not only proves just how innovative we are, but also benefits the success rate of future tax credit claims.”

P&M has now started to receive HMRC payments for the R&D activity it has undertaken, which Cranfield says has had a significant impact on the business: “The financial boost the scheme has given us allows us to reinvest funds straight back in to further innovation and product development. We can only survive by being cutting-edge, and this extra funding allows us to stay ahead of the curve.”

He added: “Having ForrestBrown on board as experts opened our eyes to the potential to make a claim against a far broader range of activities and expenditure than we initially thought, and I’d advise other companies to look very closely at the range of activities that could qualify as they might be surprised.”

Simon Brown, managing director of ForrestBrown said: “As we approach advising on our thousandth claim, we’ve seen first-hand the benefit that the R&D tax credit scheme brings to companies like P&M Aviation in allowing them to remain at the forefront of innovation.

“R&D tax credits can give companies a vital cash flow boost. For some it means they can grow their business organically, and for others it can bridge the gap between funding rounds. Many businesses are able to accelerate their new product development, expand their team with highly-skilled staff and new operations and open new offices or facilities – all as a direct result of using the scheme.”

www.pmaviation.co.uk

www.flyingforfreedom.org

www.forrestbrown.co.uk

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P&M Aviation

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