Glossary

Plain definitions of the terms used in the R&D tax credit fee debate and in the claim rules of the five countries this site covers.

A

Accuracy-related penalty: A US penalty equal to 20 percent of the portion of an underpayment of tax that is attributable to causes such as negligence or a substantial understatement of income tax.1 It falls on the taxpayer, not on the adviser who prepared the return.
Additional Information Form: A form that UK companies must send to HMRC to support a claim for R&D tax relief or expenditure credit, before or on the same day as the Company Tax Return.2 It asks for contact details of all agents involved in the claim, and HMRC states that a claim will not be accepted without it.2 The requirement applies in practice to claims made on or after 8 August 2023.3
Amended return: A return filed after the original return to change what was reported. Circular 230 treats an amended return and a claim for refund as tax returns for its purposes.4 Many US research credit claims are made this way, and the IRS sets specific information requirements for them.5

B

Billing arrangement: In Canada, the basis on which an SR&ED claim preparer is paid. Part 9 of Form T661 asks for a billing arrangement code, the billing rate, any other billing arrangement and the total fee paid, payable or expected to be paid.6 When announcing the change, Budget 2013 said the information would include whether contingency fees were used.7
Business component: Any product, process, computer software, technique, formula or invention that is to be held for sale, lease or license, or used by the taxpayer in its trade or business.8 The four-part test for qualified research is applied separately to each business component, and Section G of Form 6765 asks for information by business component.9

C

Capped fee: A fee arrangement with a stated maximum, for example a percentage of the credit that cannot exceed a set amount. Under Circular 230, a fee that depends on the specific result attained is a contingent fee, so a cap does not by itself change how a percentage fee is classified.10
Circular 230: The Treasury Department regulations governing practice before the Internal Revenue Service, published at Title 31, Part 10 of the Code of Federal Regulations.4 Section 10.27 sets the rules on fees, including contingent fees.10
Claim notification: A UK requirement to tell HMRC in advance that a company intends to claim R&D relief. For accounting periods beginning on or after 1 April 2023, the notification must be made within six months of the end of the period of account, or the claim is barred, unless an exception applies, such as the company having made an R&D claim in the three years ending with the last day of that notification period.11
Claim preparer: In Canada, a person or firm that accepts payment to prepare, or help prepare, an SR&ED claim. Each claim preparer must be identified in Part 9 of Form T661.6
Claim preparer information penalty: A Canadian penalty of $1,000 for each SR&ED claim where the required claim preparer information is missing, incomplete or inaccurate.6 Where a claim preparer was involved, the preparer and the claimant are jointly and severally, or solidarily, liable for it.6 It is set out in section 162 of the Income Tax Act.12
Contingent fee: Under Circular 230, any fee based in whole or in part on whether a position on a return avoids challenge by the IRS or is sustained, including a fee based on a percentage of the refund reported or of the taxes saved.10 It also includes an arrangement under which the adviser refunds some or all of the fee if the position is challenged or not sustained.10 In 2014 a federal court held that the IRS lacked authority to apply the contingent fee rule to ordinary refund claims filed before an examination begins.13

E

Enrolled agent: A person who has earned the privilege of representing taxpayers before the IRS, either by passing a three-part IRS examination or through qualifying prior service as an IRS employee.14 Enrolled agents may practice before the IRS under Circular 230.4
Erroneous refund penalty: A US penalty, in section 6676 of the Internal Revenue Code, equal to 20 percent of the excessive amount when a claim for refund or credit is made for an excessive amount, unless the excess is shown to be due to reasonable cause.15 It is imposed on the person making the claim.15

F

Fixed fee: A fee agreed in advance for a defined scope of work, which does not change with the size of the credit claimed or allowed. A fixed fee is not a contingent fee as defined in Circular 230, because it does not depend on the result attained.10
Form 6765: The IRS form titled Credit for Increasing Research Activities. It is used to figure and claim the research credit, to elect the reduced credit under section 280C, and to elect and figure the payroll tax credit.16
Four-part test: The four requirements research must meet to be qualified research for the US credit: the expenditure must qualify for treatment as domestic research under section 174A, the research must be undertaken to discover technological information, the information must be intended to be useful in developing a new or improved business component, and substantially all of the activities must be elements of a process of experimentation.9 The test applies separately to each business component.9

H

Hourly fee: A fee calculated from the time spent on the work at an agreed rate. Like a fixed fee, it does not depend on the size of the credit claimed or allowed, so it is not a contingent fee as defined in Circular 230.10
HMRC Standard for Agents: HMRC's published statement of what it expects of tax agents and advisers in their dealings with HMRC, and how it deals with agents who fall short. It was first published in February 2016.17

I

Independent expert: In Ireland, a person with specialised knowledge in a field of science or technology whom Revenue may engage to report on whether activities claimed are R&D activities.18 Revenue notifies the company of the expert's identity first, and the company may object where it believes there is a genuine conflict of interest.18

M

Matter before the IRS: A Circular 230 term that includes tax planning and advice, preparing or filing returns or claims for refund or credit, and all matters connected with a presentation to the IRS.10 The contingent fee rule applies to services in connection with any matter before the IRS, subject to its exceptions.10

P

Perfection period: The time the IRS allows a taxpayer to supply missing information on a research credit refund claim. During the transition period, which the IRS says runs through January 10, 2027, a taxpayer with a deficient claim receives a letter listing the missing items and has 45 days to perfect the claim.5
Practice before the IRS: Under Circular 230, all matters connected with a presentation to the IRS relating to a taxpayer's rights, privileges or liabilities, including preparing and filing documents and representing a client at conferences, hearings and meetings.4
Pre-filing notification: In Ireland, a written notice in Revenue's prescribed form that a company must file at least 90 days before claiming the R&D Corporation Tax Credit, if it is claiming for the first time or has not claimed in any of the previous three accounting periods.18
PTIN: A preparer tax identification number. The IRS states that anyone who prepares or assists in preparing federal tax returns for compensation must have a valid PTIN before doing so.19

Q

Qualified research: Research that meets the four-part test in section 41(d) of the Internal Revenue Code.8 Only qualified research can generate qualified research expenses.8
Qualified research expenses: The sum of in-house research expenses and contract research expenses paid or incurred by the taxpayer in carrying on a trade or business.8 The research credit is calculated by reference to these expenses.8

R

R&D Corporation Tax Credit: Ireland's tax credit for qualifying R&D expenditure, governed by sections 766 to 766D of the Taxes Consolidation Act 1997.18 Revenue states that the rate is 30 percent for accounting periods commencing on or after 1 January 2024.20
RDEC: The UK's R&D expenditure credit. Under the merged scheme, it is a taxable expenditure credit at a standard rate of 20 percent for accounting periods beginning on or after 1 April 2024.21
Refund claim: A request to the tax authority to repay tax already paid, or to credit it against other liabilities. In the US, a research credit claimed on an amended return is a refund claim, and the IRS requires specific information to be included when it is filed.5
Ridgely v. Lew: A 2014 decision of the US District Court for the District of Columbia.13 The court held that the IRS lacked statutory authority to regulate contingent fees for preparing and filing ordinary refund claims, meaning refund claims filed after the original return but before the IRS begins an audit, and it permanently enjoined enforcement of the rule in that setting.13

S

Section 41: The section of the Internal Revenue Code that provides the federal credit for increasing research activities.8
Section G: The part of Form 6765 that asks for information about each business component. The IRS states that Section G is optional for tax years beginning before 2026 and required for tax years beginning after 2025, with limited exceptions.9 Filers generally report business components that make up at least 80 percent of total qualified research expenses, up to 50 business components.9
SR&ED: Scientific Research and Experimental Development, the program of Canadian tax incentives intended to encourage businesses to conduct research and development in Canada.22 It is administered by the CRA.22
Success fee: A common name for a contingent fee. In R&D tax credit work, it usually means a fee calculated as a percentage of the credit claimed or allowed. Circular 230 does not use the term; its rules refer to contingent fees.10

T

T661: The CRA form used to claim SR&ED. Part 9 of the 2013 revision of Form T661 asks for claim preparer information, including billing arrangements and fees.6
Tax return preparer: Under Circular 230, any individual within the meaning of section 7701(a)(36) of the Internal Revenue Code and the related regulations.4

U

Unconscionable fee: Circular 230 states that a practitioner may not charge an unconscionable fee in connection with any matter before the IRS.10 This rule applies to every fee basis, not only contingent fees.10

Sources

26 U.S.C. section 6662(a) and (b), United States Code, 2024 edition, GovInfo. https://www.govinfo.gov/content/pkg/USCODE-2024-title26/html/USCODE-2024-title26-subtitleF-chap68-subchapA-partII-sec6662.htm (accessed 11 October 2026). Back
HM Revenue and Customs, Additional information you must submit before you claim Research and Development tax relief, GOV.UK. https://www.gov.uk/guidance/submit-detailed-information-before-you-claim-research-and-development-rd-tax-relief (accessed 11 October 2026). Back
HM Revenue and Customs, Corporate Intangibles Research and Development Manual, CIRD182000 (additional information form). https://www.gov.uk/hmrc-internal-manuals/corporate-intangibles-research-and-development-manual/cird182000 (accessed 11 October 2026). Back
Treasury Department, Circular No. 230, Regulations Governing Practice before the Internal Revenue Service (Rev. 6-2014), 31 CFR sections 10.2 (Definitions) and 10.3 (Who may practice). https://www.irs.gov/pub/irs-pdf/pcir230.pdf (accessed 11 October 2026). Back
Internal Revenue Service, Research credit claims (Section 41) on amended returns frequently asked questions. https://www.irs.gov/businesses/corporations/research-credit-claims-section-41-on-amended-returns-frequently-asked-questions (accessed 11 October 2026). Back
Canada Revenue Agency, SR&ED T661 Claim Form, 2013 Revision, Claim preparer information, Canada.ca. https://www.canada.ca/en/revenue-agency/services/scientific-research-experimental-development-tax-incentive-program/whats-new-program/t661-claim-form-2013-revision-claim-preparer-information.html (accessed 11 October 2026). Back
Canada Revenue Agency, Budget 2013, Scientific Research and Experimental Development (SR&ED) Tax Incentive Program, Canada.ca. https://www.canada.ca/en/revenue-agency/programs/about-canada-revenue-agency-cra/federal-government-budgets/budget-2013/budget-2013-scientific-research-experimental-development-tax-incentive-program.html (accessed 11 October 2026). Back
26 U.S.C. section 41, subsections (a), (b)(1), (d)(1) and (d)(2), United States Code, 2024 edition, GovInfo. https://www.govinfo.gov/content/pkg/USCODE-2024-title26/html/USCODE-2024-title26-subtitleA-chap1-subchapA-partIV-subpartD-sec41.htm (accessed 11 October 2026). Back
Internal Revenue Service, Instructions for Form 6765 (12/2025), Section G and definitions of qualified research and qualified research expenses. https://www.irs.gov/instructions/i6765 (accessed 11 October 2026). Back
Treasury Department, Circular No. 230, Regulations Governing Practice before the Internal Revenue Service (Rev. 6-2014), 31 CFR section 10.27 (Fees). https://www.irs.gov/pub/irs-pdf/pcir230.pdf (accessed 11 October 2026). Back
HM Revenue and Customs, Corporate Intangibles Research and Development Manual, CIRD183000 (pre-notification of claims). https://www.gov.uk/hmrc-internal-manuals/corporate-intangibles-research-and-development-manual/cird183000 (accessed 11 October 2026). Back
Income Tax Act (R.S.C. 1985, c. 1 (5th Supp.)), section 162, subsections (5.1) to (5.3), Justice Laws Website. https://laws-lois.justice.gc.ca/eng/acts/I-3.3/section-162.html (accessed 11 October 2026). Back
Ridgely v. Lew, Civil Action No. 1:12-cv-00565 (CRC) (D.D.C. July 16, 2014), Memorandum Opinion (Document 48), pages 1 and 14 to 15. https://www.govinfo.gov/content/pkg/USCOURTS-dcd-1_12-cv-00565/pdf/USCOURTS-dcd-1_12-cv-00565-1.pdf (accessed 11 October 2026). Back
Internal Revenue Service, Enrolled agent information. https://www.irs.gov/tax-professionals/enrolled-agents/enrolled-agent-information (accessed 11 October 2026). Back
26 U.S.C. section 6676(a), United States Code, 2024 edition, GovInfo. https://www.govinfo.gov/content/pkg/USCODE-2024-title26/html/USCODE-2024-title26-subtitleF-chap68-subchapB-partI-sec6676.htm (accessed 11 October 2026). Back
Internal Revenue Service, About Form 6765, Credit for Increasing Research Activities. https://www.irs.gov/forms-pubs/about-form-6765 (accessed 11 October 2026). Back
HM Revenue and Customs, The HMRC standard for agents, GOV.UK. https://www.gov.uk/government/publications/hmrc-the-standard-for-agents/the-hmrc-standard-for-agents (accessed 11 October 2026). Back
Revenue, Tax and Duty Manual Part 29-02-03, Research and Development (R&D) Corporation Tax Credit (last updated April 2026), section 8.6.1 (pre-filing notification) and section 10 (independent experts). https://www.revenue.ie/en/tax-professionals/tdm/income-tax-capital-gains-tax-corporation-tax/part-29/29-02-03.pdf (accessed 11 October 2026). Back
Internal Revenue Service, PTIN requirements for tax return preparers. https://www.irs.gov/tax-professionals/ptin-requirements-for-tax-return-preparers (accessed 11 October 2026). Back
Revenue, Research and Development (R&D) Corporation Tax credit, revenue.ie. https://www.revenue.ie/en/companies-and-charities/reliefs-and-exemptions/research-and-development-rd-tax-credit/index.aspx (accessed 11 October 2026). Back
HM Revenue and Customs, Research and Development (R&D) tax relief: the merged R&D expenditure credit scheme and enhanced R&D intensive support, GOV.UK. https://www.gov.uk/guidance/research-and-development-rd-tax-relief-the-merged-scheme-and-enhanced-rd-intensive-support (accessed 11 October 2026). Back
Canada Revenue Agency, Scientific Research and Experimental Development (SR&ED) tax incentives, Canada.ca. https://www.canada.ca/en/revenue-agency/services/scientific-research-experimental-development-tax-incentive-program.html (accessed 11 October 2026). Back