Case study: Sustainable packaging firm wraps up £107k in R&D tax relief

Date: March 22, 2023

Sustainable packaging company DM Flexibles has secured more than £107,000 in R&D tax relief from the government for the development of its fully-degradable paper-based food packaging, with the support of Catax (a Ryan company).

The company

DM Flexibles, based in Leicester, is seeking to make major advances in packaging technology through the development of its DM InovaPac™ Paper, the first material that can be completely recycled using existing paper waste streams and fully degrade into biomass in water.

The R&D

The manufacturing industry has been investing heavily in alternatives to plastic packaging in recent years, but many replacements still contain some plastic, or use plant-based materials which are difficult to scale up for mass production.

DM Flexibles’ industry research found that the only truly efficiently recyclable material is paper.

However, developing paper-based packaging that meets the performance requirements for the food industry – which include barrier properties, avoiding tearing, and preventing oils from damaging the wrapping – makes this especially challenging.

DM Flexibles’ R&D activity involved researching how to enhance paper so it can perform like plastic and aluminium, and yet be a sustainable alternative to plastic for food items like crisps.

Existing paper options already on the market get around those issues by joining it with some form of plastic backing to act as a barrier — something DM Flexibles was keen to avoid. Instead, the company has created an alternative to plastic backing by developing a unique material and process that can deliver these objectives, which is currently in development and the subject of a patent application.

The result

DM Flexibles’ R&D activities – which include, among other work, developing the barrier layer, finding a way to bond it onto paper and creating an efficient seal for paper packing – have resulted in £107,614 in tax relief from the government to date.

Dilip Mistry, CEO and founder of DM Flexibles, said:

“Food packaging is a huge contributor to plastic pollution, and paper is the only viable alternative if we are to clean up the environment.

“Our mission is to develop a paper-based product that is fit for the food industry and can withstand all sorts of pressures, including moisture, temperature changes and being transported around the world. This is an enormous challenge, and involves spending a huge amount of time and investment on research, testing and refining.

“R&D tax relief has been hugely beneficial. It means we have been able to reinvest the money and continue our research into sustainable plastic alternatives that can back onto paper to make a product which meets the rigorous requirements of the food industry.

“We will continue to look into R&D tax relief as we continue on our journey to replace plastic food packaging for good.”

Kully Nijjar, Associate Director at Catax (a Ryan company), added:

“DM Flexibles is a brilliant example of a company that is committed to innovating to improve the environment and create a green solution to the prolific problem of plastic pollution.

“Dilip and his team have done a superb job identifying new solutions and the significant sums the company has received is testament to their hard work and persistence.

“This relief is now playing a key role in helping them continue with their important work.”

R&D tax relief was introduced by the government in 2000 to incentivise innovation, and results in either a reduction in a limited company’s corporation tax bill or a cash lump sum.

Many firms still do not realise the work they do qualifies as R&D, which is defined as any work that seeks to resolve a scientific or technological uncertainty, whether that’s a new process, product or service.

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