Referral commissions and sales practices

1Summary

A business does not always seek out a research credit adviser. Sometimes its accountant introduces one, sometimes the adviser calls first. Tax authorities in several countries have recorded concern about how some research and development claims are sold. The CRA has warned businesses to be cautious of unsolicited offers to claim SR&ED credits.1 HMRC has written to thousands of companies in sectors where it does not expect research, telling them what to do if an agent offers "to submit a speculative claim in return for high commission".2

This paper describes three practices in general terms: referral fees paid to accountants and others who introduce clients, unsolicited sales approaches, and the way sales staff are rewarded. It sets out the professional rules and federal laws that apply in the United States, and what tax authorities abroad have said, and it considers how each practice interacts with a fee calculated as a percentage of the credit. It discusses practices, not firms, and does not suggest that any adviser who pays referral fees or makes sales calls acts improperly.

It finds that the rules require disclosure of referral fees by some professionals but that the information is not reported to the IRS, and that no official source measures any of these practices for research credit claims. The paper sets out the case for these practices fairly before answering it. Swanson Reed's position is stated once, in a labeled box.

2How claims reach advisers

The official record shows that research and development claims are commonly prepared by outside advisers. The 2008 IRS guide for examiners, which states that it is not an official pronouncement of IRS position, said federal research credit refund claims "are usually based upon a Research Credit Study prepared by an outside consultant".3 HMRC states that more than 90 percent of UK claimants have an authorized agent acting for them.2 In 2012 Canada's Department of Finance reported that about two-thirds of businesses relied on third parties to prepare SR&ED claims.4

HMRC's random enquiry programme for 2020 to 2021 also looked at whether SME claimants used a specialist R&D agent. Across all sizes of claim, around half had done so. For the largest claims, non-compliance was similar with and without a specialist agent, at 15 and 18 percent; for claims under £10,000 it was higher where a specialist agent was involved.5 HMRC did not report how those agents were engaged or paid.

How a business comes to use a particular adviser is not recorded in any official source found for this paper. Form 6765 does not ask who prepared a federal claim, how the preparer was paid, or how the business was introduced.6 The rest of this paper therefore relies on the text of the rules, on official warnings and on analysis of incentives, and it says so where it does.

3Referral fees and commissions

3.1What a referral fee is

In this paper, a referral fee is a payment made to a person, such as the business's accountant or another adviser, for introducing a client to a research credit adviser. A commission is a payment the introducer receives from a third party because the client buys a service on the introducer's recommendation. The two overlap, and the professional codes treat them together.

3.2What the AICPA Code requires

The AICPA Code's Commissions and Referral Fees Rule provides that a member who "accepts a referral fee for recommending or referring any service of a CPA to any person or entity or who pays a referral fee to obtain a client shall disclose such acceptance or payment to the client".7 A member who is permitted to receive a commission, and who recommends or refers a product or service to which it relates, must disclose that fact to the person to whom the recommendation is made.7 The Code provides that these disclosures should be made in writing.7 It prohibits commissions altogether where the member also performs an audit, review or certain compilations or examinations for the client.7

The rule is a disclosure rule. It does not prohibit a CPA from receiving a referral fee for introducing a client to a research credit adviser, and it does not limit how the fee is calculated. It binds AICPA members.7

3.3What Circular 230 says

Circular 230 has no rule addressed specifically to referral fees. Two of its provisions are relevant. It treats as a conflict of interest a significant risk that a practitioner's representation of a client will be "materially limited by the practitioner's responsibilities to another client, a former client or a third person, or by a personal interest of the practitioner", and allows representation in that case only on conditions that include the client's informed consent confirmed in writing.8 And it provides that a practitioner may not, in IRS matters, assist or accept assistance from any person who, to the practitioner's knowledge, obtains clients or otherwise practices in a manner forbidden by its solicitation rules.8

3.4Rules in other countries

Professional rules abroad also turn on disclosure. They are described here factually.

Country	Rule	What it requires
United Kingdom	Professional Conduct in Relation to Taxation, paragraph 2.9	A member "must always disclose to their client if they are receiving commission, incentives or any other advantage" from a third party relating to the matter, and the amounts or the basis of calculation9
United Kingdom	CIOT and ATT Professional Rules and Practice Guidelines, paragraph 8.3.1	A member should tell the client no later than when the advice is given, and state the amount or the basis of calculation10

3.5Where a referral fee meets a contingent fee

The following is analysis, not a measured finding. A referral fee may be fixed, or it may be calculated by reference to the fee the adviser earns. Where the adviser's fee is a percentage of the credit and the referral fee is a share of the adviser's fee, the introducer's reward also rises with the size of the claim. The person the business trusts to recommend an adviser then has a financial interest, however small, in the size of the claim the adviser produces.

The introducer is often the business's own accountant, whose recommendation the business is likely to accept without testing it. The professional rules address this by requiring disclosure to the client.79 They do not require disclosure to the tax authority, and Form 6765 does not ask.6

4Unsolicited approaches

4.1What tax authorities have said

Several tax authorities have warned about unsolicited approaches offering research and development claims.

Canada. In October 2022 the CRA said it had "observed a recent increase in SR&ED claims containing false and/or non-compliant information" and advised businesses to "be cautious if you receive an unsolicited offer to help you claim SR&ED investment tax credits". It added: "Be wary of individuals who try to convince you to file a claim when your business is not actively conducting R&D work."1 In separate guidance for dental professionals, it advised businesses to get a second opinion when a third party says they are eligible.11

United Kingdom. HMRC has run education campaigns aimed at "sectors where R&D is unlikely to be carried out, such as care homes, childcare providers, personal trainers, wholesalers and retailers, pubs and restaurants", stating that "companies in these sectors are at risk of being approached by unscrupulous agents".2 In July 2023 it wrote to around 7,500 care home companies, including on what to do if approached by an agent offering a speculative claim for high commission.2 It has said that its claim notification requirement for first-time claimants will help protect businesses "from unscrupulous agents who try to pressure them into making non-compliant historic claims".5 Its R&D Anti-Abuse Unit has worked with the Advertising Standards Authority since 2023 to remove false advertising by some agents claiming their services are approved by HMRC.2

HMRC's published data adds context. In its 2023 analysis of a random sample of SME claims for 2020 to 2021, first-time claims had higher non-compliance, 38 percent by value against 22 percent for repeat claimants, and claims under £10,000 had the highest rates, at 90 percent for those with an R&D agent and around 75 percent for those without, although they were under 1 percent of the value claimed.5 Those figures do not show how any claim was sold.

4.2The federal record on a different credit

The United States has recent experience of large-scale marketing of a business tax credit. The employee retention credit is a different, refundable credit, and nothing in this section is evidence about research credit advisers.

The IRS warned in April 2023 that third parties were "aggressively promoting Employee Retention Credit schemes on radio and online", charging "either large upfront fees or a fee that is contingent on the amount of their refund".12 Its list of warning signs includes "Unsolicited ads, calls, emails or texts from someone you don't know", statements that eligibility can be determined "within minutes", and "Fees based on a percentage of the refund amount".13 In March 2024 it warned businesses to be on "high alert with any ERC promoter who urged them to claim ERC because they 'have nothing to lose'", noting that businesses that claim incorrectly "risk repayment, penalties, interest, audit and other expenses".14 To qualify for its voluntary disclosure program, a business had to give the IRS "the names, addresses and telephone numbers of any advisors or tax preparers who advised or assisted them with their claim".15

4.3What federal law says about solicitation

Circular 230 provides that a practitioner may not use or take part in any public communication or private solicitation containing "a false, fraudulent, or coercive statement or claim; or a misleading or deceptive statement or claim".8 An uninvited written or oral solicitation is prohibited if it violates federal or state law or another applicable rule, and any lawful solicitation must "clearly identify the solicitation as such".8 A practitioner "may not persist in attempting to contact a prospective client if the prospective client has made it known to the practitioner that he or she does not desire to be solicited".8 These rules apply to practitioners: attorneys, CPAs, enrolled agents and others authorized to practice before the IRS.8

The Federal Trade Commission's Telemarketing Sales Rule exempts "Telephone calls between a telemarketer and any business to induce the purchase of goods or services" from most of its requirements. The exemption does not extend to the Rule's prohibitions on misrepresenting material information and on "Making a false or misleading statement to induce any person to pay for goods or services".16

5How sales staff are rewarded

No official source found for this paper describes how the sales staff of research credit advisers are paid, in the United States or elsewhere. This section is therefore analysis of incentives, not a description of any adviser's practice.

A sales team can be paid a salary, a commission on each engagement signed, or a commission linked to the fee the engagement produces. Where an adviser's fee is a percentage of the credit and a salesperson's commission is a share of that fee, the salesperson's reward rises with the size of the claim the client is told to expect. Where sales staff are paid only on commission, every part of their pay depends on signing clients.

None of this means that commission-paid sales staff mislead anyone. Commission is a common way to pay sales staff in many industries. The point is narrower. A business that receives an unsolicited call may be told, at the start, whether it qualifies and roughly what it might receive. The IRS's warnings about the employee retention credit concern that moment.13 HMRC's own illustrative case study describes an agent with "minimal knowledge" of a restaurant's business who, "after asking a few questions, suggests some business activities will qualify".2

6Where the incentives meet

The following table summarizes, as analysis, how each party involved in selling and preparing a claim is rewarded when the adviser's fee is a percentage of the credit, and where the consequences of a reduced claim fall. It describes possible arrangements in general terms, not any adviser's practice.

Party	How the reward may be set	Effect of a larger claim on the reward	Exposure if the claim is reduced
Adviser	A percentage of the credit	Rises	Depends on the contract; no federal rule requires the fee to be repaid
Introducer	A fixed sum, or a share of the adviser's fee	Rises if it is a share of the fee	None as a matter of tax law
Salesperson	Salary, or commission on engagements or fees	Rises if commission is linked to the fee	None as a matter of tax law
Business	The credit, less the fee	Rises, if the claim survives review	Repays the credit, with interest, and may owe a penalty1718

Where the adviser charges a fixed fee for the work, the first three rows no longer depend on the size of the claim. Referral fees and commissions can still exist, and the disclosure rules still apply, but none of the people involved in introducing or selling the engagement is paid more because the claim is larger.

7Who bears the consequences

However a claim is sold, the business that files it is responsible for it. HMRC states that "Even if a customer uses a tax agent, they remain responsible for their own tax affairs."2 The CRA tells businesses that "You will be held liable for any false information".1 In the United States, the person making an excessive claim for refund is liable for a penalty of 20 percent of the excessive amount unless it is due to reasonable cause.17 Neither the introducer nor the salesperson is a party to the claim.

8The case for these practices

These practices have real justifications, and they should be stated in their strongest form.

Referral fees help businesses find specialists. A general accountant may know that a client does research but not how to claim. A referral connects the client with a specialist, and a referral fee rewards the accountant for the time spent identifying the opportunity.

Outbound sales raise awareness. Many businesses that do qualifying research do not know a credit exists. Canada's 2012 consultation itself noted that "Marketing efforts by third-party tax preparers could contribute to a more widespread knowledge of the SR&ED program", and that preparers may take on claims for businesses that would not otherwise have claimed.4

Commission aligns effort with results. Paying sales staff by results is common, keeps fixed costs low and lets smaller advisers compete.

Disclosure rules already apply. Professional codes require referral fees and commissions to be disclosed to the client, so the client can take them into account.79

Nothing in this paper suggests that advisers who pay referral fees, make outbound calls or pay commissions act improperly.

9Our answer (Swanson Reed's position)

This section is Swanson Reed's view.

9.1Disclosure reaches the client, not the tax system

The disclosure rules tell the client that a referral fee exists. They do not tell the client whether the fee rises with the claim, unless the basis of calculation is given, and they do not reach the IRS. Disclosure also depends on the introducer being bound by a professional code; a person who is not an AICPA member or a Circular 230 practitioner is not bound by those rules.78

9.2Awareness does not require a percentage

The awareness argument is real. But a business can be told about the credit, and introduced to a specialist, by an adviser paid a fixed fee for the work. Tax authorities in Canada also offer free tools and consultations to businesses considering a claim.1

9.3The incentive compounds

The concern with contingent fees is that the fee rises with the claim. Where referral fees and sales commissions are calculated from that fee, the same incentive extends to everyone involved in bringing the client to the adviser. The business, which bears the consequences, is the only party whose interest is in a claim that survives review rather than a claim that is large.217

9.4The rules already point the same way

Circular 230 and the AICPA Code already restrict contingent fees for preparing returns and refund claims by those they bind.87 Under the 2014 Ridgely v. Lew decision, however, the IRS cannot apply the Circular 230 rule to ordinary refund claims filed before an audit.19 Treasury and the IRS have proposed treating such fees as disreputable conduct because a practitioner with a direct financial interest in a client's tax benefits "may be incentivized to increase such tax benefits". The proposal is not final.20

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. A fee that does not rise with the claim also removes the link between the size of the claim and any referral or sales reward calculated from it. Swanson Reed, which publishes this paper, is a fixed-fee R&D tax adviser. It has a direct commercial interest in the outcome: it does not charge success fees, and a ban would remove a pricing model it competes against.

10What the record does and does not show

What the record shows:

Professional codes in the United States and the United Kingdom require referral fees and commissions to be disclosed to the client.79
Tax authorities in Canada and the United Kingdom have warned about unsolicited approaches and sales practices in research and development claims.12
The IRS warned about unsolicited marketing and percentage fees for the employee retention credit, a different credit.13
Circular 230 restricts misleading and persistent solicitation by practitioners, and the Telemarketing Sales Rule bars misrepresentation in calls to businesses.816

What the record does not show:

How many federal research credit claims are introduced through a referral, or how introducers are paid.
How research credit sales staff are paid.
Whether claims introduced by referral or sold by unsolicited approach are adjusted more often than others.

No official source found for this paper collects this information, and Form 6765 does not ask for it.6 The analysis here rests on the rules, on official warnings and on the structure of the incentives involved.

References

Canada Revenue Agency, Advisory for businesses claiming SR&ED investment tax credits (12 October 2022), sections "The CRA is here to help you" and "Tips to protect yourself". https://www.canada.ca/en/revenue-agency/news/newsroom/tax-tips/tax-tips-2022/advisory-businesses-claiming-sred-investment-tax-credits.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 2.3, 2.4 and 2.5, including the illustrative case study. 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
Internal Revenue Service, Large and Mid Size Business Division, Research Credit Claims Audit Techniques Guide (RCCATG): Credit for Increasing Research Activities Section 41, LMSB-04-0508-030 (May 2008), introductory note and Chapter II, "The RC Claim Engagement Letter". https://www.irs.gov/businesses/research-credit-claims-audit-techniques-guide-rccatg-credit-for-increasing-research-activities-section-41 (accessed 11 October 2026). Back
Department of Finance Canada, Consultation Regarding the Impact of Contingency Fees on the Effectiveness of the SR&ED Tax Incentive Program (2012), sections "Background" and "Effects of Contingency Fees", archived copy of 7 May 2013. https://web.archive.org/web/20130507033404/http://www.fin.gc.ca/activty/consult/sred-rsde-eng.asp (accessed 11 October 2026). Back
HM Revenue and Customs, HMRC's approach to Research and Development tax reliefs (published 17 July 2023), section 2.1 and section 3.2, Themes 4 and 5. https://www.gov.uk/government/publications/compliance-approach-to-research-and-development-tax-reliefs/hmrcs-approach-to-research-and-development-tax-reliefs (accessed 11 October 2026). Back
Internal Revenue Service, Instructions for Form 6765 (Rev. December 2025), read in full. https://www.irs.gov/instructions/i6765 (accessed 11 October 2026). Back
American Institute of CPAs, AICPA Code of Professional Conduct (updated for all official releases through September 2026), ET 1.520.001 Commissions and Referral Fees Rule, paragraphs .01, .03 and .04; ET 1.520.080 Disclosure of Commissions and Referral Fees; and ET 1.510.001 Contingent Fees Rule. https://pub.aicpa.org/codeofconduct/ethicsresources/et-cod.pdf (accessed 11 October 2026). Back
Treasury Department, Circular No. 230, 31 CFR part 10, sections 10.3, 10.27, 10.29(a) and (b), and 10.30(a), (c) and (d). https://www.ecfr.gov/current/title-31/subtitle-A/part-10 (accessed 11 October 2026). Back
AAT, ACCA, ATT, CIOT, ICAEW, ICAS and STEP, Professional Conduct in Relation to Taxation (effective 1 January 2026), paragraph 2.9. https://www.icaew.com/-/media/corporate/files/technical/tax/pcrt/pcrt-effective-1-january-2026.ashx (accessed 11 October 2026). Back
Chartered Institute of Taxation and Association of Taxation Technicians, Professional Rules and Practice Guidelines (effective 9 November 2018, updated 1 January 2021), paragraph 8.3.1. https://www.att.org.uk/sites/default/files/PRPG%20%28Update%201.1.2021%29%20-%20Final.pdf (accessed 11 October 2026). Back
Canada Revenue Agency, SR&ED news and updates, item "Dentistry professionals: look out for third parties promising access to SR&ED tax incentives". https://www.canada.ca/en/revenue-agency/services/scientific-research-experimental-development-tax-incentive-program/sred-updates.html (accessed 11 October 2026). Back
Internal Revenue Service, Employers: Watch out for Employee Retention Credit schemes, IRS Tax Tip 2023-44, 4 April 2023. https://www.irs.gov/newsroom/employers-watch-out-for-employee-retention-credit-schemes (accessed 11 October 2026). Back
Internal Revenue Service, Employee Retention Credit, section "Look for these warning signs" (page last reviewed or updated 8 October 2026). https://www.irs.gov/coronavirus/employee-retention-credit (accessed 11 October 2026). Back
Internal Revenue Service, Seven warning signs of incorrect Employee Retention Credit claims for businesses to review as key March 22 deadline approaches, News release IR-2024-75, 20 March 2024. https://www.irs.gov/newsroom/seven-warning-signs-of-incorrect-employee-retention-credit-claims-for-businesses-to-review-as-key-march-22-deadline-approaches (accessed 11 October 2026). Back
Internal Revenue Service, IRS new Voluntary Disclosure Program lets employers who received questionable Employee Retention Credits pay them back at discounted rate, News release IR-2023-247, 21 December 2023. https://www.irs.gov/newsroom/irs-new-voluntary-disclosure-program-lets-employers-who-received-questionable-employee-retention-credits-pay-them-back-at-discounted-rate-interested-taxpayers-must-apply-by-march-22 (accessed 11 October 2026). Back
Federal Trade Commission, Telemarketing Sales Rule, 16 CFR 310.6(b)(7) and 16 CFR 310.3(a)(2) and (4). https://www.ecfr.gov/current/title-16/chapter-I/subchapter-C/part-310 (accessed 11 October 2026). Back
Office of the Law Revision Counsel, 26 U.S.C. 6676, Erroneous claim for refund or credit, subsection (a), United States Code 2024 edition published by the Government Publishing Office. https://www.govinfo.gov/content/pkg/USCODE-2024-title26/html/USCODE-2024-title26-subtitleF-chap68-subchapB-partI-sec6676.htm (accessed 11 October 2026). Back
Office of the Law Revision Counsel, 26 U.S.C. 6601, Interest on underpayment, nonpayment, or extensions of time for payment, of tax, subsection (a), United States Code 2024 edition published by the Government Publishing Office. https://www.govinfo.gov/content/pkg/USCODE-2024-title26/html/USCODE-2024-title26-subtitleF-chap67-subchapA-sec6601.htm (accessed 11 October 2026). Back
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Cite this paper

Summary

1Summary

2How claims reach advisers

3Referral fees and commissions

3.1What a referral fee is

3.2What the AICPA Code requires

3.3What Circular 230 says

3.4Rules in other countries

3.5Where a referral fee meets a contingent fee

4Unsolicited approaches

4.1What tax authorities have said

4.2The federal record on a different credit

4.3What federal law says about solicitation

5How sales staff are rewarded

6Where the incentives meet

7Who bears the consequences

8The case for these practices

9Our answer (Swanson Reed's position)

9.1Disclosure reaches the client, not the tax system

9.2Awareness does not require a percentage

9.3The incentive compounds

9.4The rules already point the same way

10What the record does and does not show

References

About this paper

Cite this paper

Summary

1Summary

2How claims reach advisers

3Referral fees and commissions

3.1What a referral fee is

3.2What the AICPA Code requires

3.3What Circular 230 says

3.4Rules in other countries

3.5Where a referral fee meets a contingent fee

4Unsolicited approaches

4.1What tax authorities have said

4.2The federal record on a different credit

4.3What federal law says about solicitation

5How sales staff are rewarded

6Where the incentives meet

7Who bears the consequences

8The case for these practices

9Our answer (Swanson Reed's position)

9.1Disclosure reaches the client, not the tax system

9.2Awareness does not require a percentage

9.3The incentive compounds

9.4The rules already point the same way

10What the record does and does not show

References

About this paper

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