Fee disclosure models (brief) | Research Credit Integrity Alliance

Key points

Canada requires every SR&ED claim to report each paid preparer's billing arrangement, rate and fee, with a 1,000 dollar penalty for missing or inaccurate information.12
The UK requires R&D claimants to name the agents involved but not their fees, and the federal Form 6765 asks neither.34
Form CRS requires investment advisers to explain the conflicts of interest their fees create, not only the fees.5
The ABA Model Rules, the Investment Advisers Act, the UK Financial Conduct Authority and Canada's Lobbying Act each combine disclosure with limits on outcome-based pay in defined settings.6789
Disclosure informs; it does not change how a fee is calculated.

Three audiences

Fee disclosure can serve three purposes. Disclosure to the tax authority, at filing, lets it use the fee basis to select claims for review. Disclosure to the client, before engagement, lets the client decide with knowledge of the fee. Disclosure to the public lets clients compare advisers before they make contact. The design also turns on what is disclosed (basis, rate, amount, or the incentive) and what happens if it is missing.

In tax administration

Canada. After a 2012 consultation on SR&ED contingency fees, Budget 2013 required claim forms to report preparers and billing arrangements, saying the information "will facilitate the identification of SR&ED program claims with a higher risk of non-compliance".10 Part 9 of Form T661 asks for each preparer's name, business number, billing code, rate and total fee; code 1 is a contingency fee based on a percentage of the credit earned.1 The claimant and preparer are jointly liable for a 1,000 dollar penalty if the information is missing or wrong.2 No published evaluation of what the disclosure has changed was identified.

United Kingdom. The additional information form must give contact details for "all agents involved in the R&D claim", but not their fees.3 HMRC advises claimants to make sure they "fully understand any fees the agent will charge", and from April 2024 stopped agents receiving clients' R&D tax credit payments through nominations, citing "the financial incentive for agents to overstate claims".11

United States. The Form 6765 instructions ask for detailed information by business component but not who prepared the claim or how they were paid.4 Circular 230 lets practitioners publish fee schedules and requires them to honor published rates for 30 days, and separately restricts contingent fees for returns and refund claims.1213

In other professions

Lawyers (United States). The ABA Model Rules require the basis or rate of the fee to be communicated to the client. A contingent fee agreement must be in a writing signed by the client, state the method and percentages, and be followed by a closing statement. Contingent fees are prohibited in some domestic relations matters and in criminal defense.6

Solicitors (England and Wales). The SRA Transparency Rules require firms offering certain services to publish prices, "the basis for your charges", and, for conditional fee or damages-based agreements, when clients may have to pay from any damages.14

Investment advisers (United States). Form CRS, delivered before or at the start of the relationship, must summarize fees "and the conflicts of interest they create", for example that an adviser paid on assets "may therefore have an incentive to encourage the retail investor to increase the assets".515 The Investment Advisers Act prohibits pay based on a share of a client's capital gains, except for qualified clients.716

Financial advisers (United Kingdom). The FCA requires written disclosure of charging structures, in cash terms where practicable, and bans commissions for retail advice.17 Since 1 October 2020 it has banned contingent charging for pension transfer advice, subject to narrow exceptions, to ensure charges "do not create any potential for a conflict of interest".8 It said it had found "a high level of disclosures which do not comply with our rules" and that "a ban places a value on advice itself rather than on a transaction".18

What disclosure can and cannot do

Disclosure gives the authority, the client or the market information it did not have, and on a claim form it creates official data. But a fee calculated as a percentage of the credit rises with the credit whether or not anyone has been told. Disclosure also depends on compliance and comprehension; the FCA found widespread non-compliance in its own regime.18 Where regulators judged an outcome-based fee to create an incentive that disclosure would not control, they added limits.6789

The case for disclosure alone

Disclosure preserves choice for businesses that can only pay from the credit, lets the IRS target review, generates evidence that does not now exist, and treats no adviser as a wrongdoer. Canada chose it for SR&ED claims.10 These are serious arguments, and nothing in this brief suggests that advisers who charge contingent fees act improperly.

The answer is that identifying risky claims after filing does not change the incentive when the claim is prepared, and that low upfront cost can be met by fixed, capped or staged fees, with narrow exceptions where needed, as the FCA's rules show.8 Disclosure and prohibition are complements, not alternatives.

Our position

Congress should prohibit contingent fees, commonly called success fees, in federal research and development tax credit engagements under Section 41, so that advisers are paid for the work they perform rather than for the size of the claim they produce. Swanson Reed, which publishes this brief, is a fixed-fee R&D tax adviser with a direct commercial interest: it does not charge success fees, and a ban would remove a pricing model it competes against.

References

Canada Revenue Agency, Form T661, Scientific Research and Experimental Development (SR&ED) Expenditures Claim, T661 E (26), Part 9. https://www.canada.ca/content/dam/cra-arc/formspubs/pbg/t661/t661-26e.pdf (accessed 11 October 2026). Back
Government of Canada, Income Tax Act, RSC 1985, c 1 (5th Supp), subsections 162(5.1) to (5.3). https://laws-lois.justice.gc.ca/eng/acts/I-3.3/section-162.html (accessed 11 October 2026). Back
HM Revenue and Customs, Additional information you must submit before you claim Research and Development tax relief, section "Contact details". https://www.gov.uk/guidance/submit-detailed-information-before-you-claim-research-and-development-rd-tax-relief (accessed 11 October 2026). Back
Internal Revenue Service, Instructions for Form 6765 (Rev. December 2025), What's New and Section G. https://www.irs.gov/instructions/i6765 (accessed 11 October 2026). Back
Securities and Exchange Commission, Form CRS instructions, Item 3. https://www.sec.gov/files/formcrs.pdf (accessed 11 October 2026). Back
American Bar Association, Model Rules of Professional Conduct, Rule 1.5, paragraphs (b) to (d). Archived copy captured 2 September 2026. https://web.archive.org/web/20260902195945/https://www.americanbar.org/groups/professional_responsibility/publications/model_rules_of_professional_conduct/rule_1_5_fees/ (accessed 11 October 2026). Back
Office of the Law Revision Counsel, 15 U.S.C. 80b-5, subsection (a)(1), United States Code 2024 edition published by the Government Publishing Office. https://www.govinfo.gov/content/pkg/USCODE-2024-title15/html/USCODE-2024-title15-chap2D-subchapII-sec80b-5.htm (accessed 11 October 2026). Back
Financial Conduct Authority, FCA Handbook, COBS 19.1B, Ban on contingent charging for pension transfers and conversions. https://www.handbook.fca.org.uk/handbook/COBS/19/1B.html (accessed 11 October 2026). Back
Government of Canada, Lobbying Act, RSC 1985, c 44 (4th Supp), section 10.1. https://laws-lois.justice.gc.ca/eng/acts/L-12.4/page-2.html (accessed 11 October 2026). Back
Department of Finance Canada, Economic Action Plan 2013 (Budget 2013), Annex 2, section "Scientific Research and Experimental Development Program". Archived copy captured 20 December 2013. https://web.archive.org/web/20131220170359/http://www.budget.gc.ca/2013/doc/plan/anx2-eng.html (accessed 11 October 2026). Back
HM Revenue and Customs, Approach to Research and Development tax reliefs 2023 to 2024 (published 30 October 2024), sections 2.1 and 2.5. https://www.gov.uk/government/publications/hmrcs-approach-to-research-and-development-tax-reliefs-2023-to-2024/approach-to-research-and-development-tax-reliefs-2023-to-2024 (accessed 11 October 2026). Back
Treasury Department, Circular No. 230, 31 CFR 10.30, paragraph (b). https://www.ecfr.gov/current/title-31/subtitle-A/part-10/subpart-B/section-10.30 (accessed 11 October 2026). Back
Treasury Department, Circular No. 230, 31 CFR 10.27, Fees, paragraphs (b) and (c). https://www.ecfr.gov/current/title-31/subtitle-A/part-10/subpart-B/section-10.27 (accessed 11 October 2026). Back
Solicitors Regulation Authority, SRA Transparency Rules (version in effect from 11 April 2025), rules 1.1 to 1.6. https://www.sra.org.uk/solicitors/standards-regulations/transparency-rules/ (accessed 11 October 2026). Back
Securities and Exchange Commission, 17 CFR 275.204-5, Delivery of Form CRS. https://www.ecfr.gov/current/title-17/section-275.204-5 (accessed 11 October 2026). Back
Securities and Exchange Commission, 17 CFR 275.205-3, paragraphs (a) and (d)(1). https://www.ecfr.gov/current/title-17/section-275.205-3 (accessed 11 October 2026). Back
Financial Conduct Authority, FCA Handbook, COBS 6.1A, Adviser charging and remuneration, COBS 6.1A.4R and 6.1A.17R. https://www.handbook.fca.org.uk/handbook/COBS/6/1A.html (accessed 11 October 2026). Back
Financial Conduct Authority, PS20/6, Pension transfer advice: feedback on CP19/25 and our final rules and guidance (June 2020), paragraph 1.20 and Chapter 2, "Our response" following paragraph 2.18. https://www.fca.org.uk/publication/policy/ps20-06.pdf (accessed 11 October 2026). Back