Are We Applying the Same Ethical Standards Everywhere?
From 1 January 2026, the updated Professional Conduct in Relation to Taxation (PCRT) applies.
You can read the full guidance here:
https://www.tax.org.uk/professional-conduct-in-relation-to-taxation-pcrt
In the R&D space, PCRT is explicit.
It states that a member:
‘must carry out their work with proper regard for the technical and professional standards expected’; and
‘must not undertake professional work which they are not competent to perform unless they obtain appropriate assistance from a suitably qualified specialist.’
You can see this clearly in the CIOT/ATT R&D Topical Guidance (June 2020):
https://www.tax.org.uk/sites/default/files/2020-06/R%26D%20Topical%20Guidance%20-%20CIOT%20Final.pdf
It goes further:
‘Members must not provide R&D tax advice unless they are competent to do so.’
That is direct, there is no ambiguity.
So here is the question…
Why does practice sometimes become less clear when we move into insolvency advice and referral arrangements?
When Advice Crosses the Line
I recently met a distressed company whose directors assured me that their accountant had advised them to stop paying HMRC 4 months previously.
At that stage, the company was, I believe, insolvent, so the directors’ duties had shifted towards being owed to creditors as a whole.
The accountants’ advice was not accounts preparation, it was insolvency advice.
PCRT makes clear that members must refer where they are outside their competence. The principle is obvious in tax. To me, it is equally obvious in insolvency.
There is nothing wrong with saying ‘You may now be insolvent. Directors’ duties change at that point. You need to speak to a licensed insolvency practitioner. I will attend with you.’ because that is responsible.
What is dangerous is advising on:
• Which creditors to pay, or not pay
• Whether to repay director loans
• Trading while insolvent
• Asset disposals
• Dividend payments
• Handling HMRC arrears
That is specialist, regulated territory.
Now Add Referral Fees Into the Equation
In the R&D tax credit world, it is not uncommon for accountants to receive a share of the R&D specialist’s fee for introducing a claim.
Sometimes it is disclosed, sometimes it is built into engagement letters, often it is not clearly explained at all.
The ICAEW’s Code of Ethics is clear on referral fees and commissions.
You can read the Code here:
https://www.icaew.com/regulation/ethics/icaew-code-of-ethics
The Code requires:
• Disclosure of commissions and referral fees
• Informed client consent before retention
• Transparency as to amounts received
The ICAEW has reinforced this in its regulatory guidance on referral fees and commissions:
https://www.icaew.com/regulation/regulatory-news/regulatory-news-2024-02/referral-fees-and-commissions-client-consent-is-your-responsibility
But mere disclosure does not eliminate the self-interest threat.
If an accountant receives one third of the R&D adviser’s fee:
• Is their recommendation entirely neutral?
• Are they incentivised to encourage the claim?
• Are they as sceptical as they would otherwise be in reviewing the claim and putting it through the tax comps they put in?
Human nature matters.
In Insolvency The Rules Are Much Stricter
When we move into insolvency, the regulatory position hardens considerably.
The ICAEW Insolvency Code of Ethics can be found here:
https://www.icaew.com/regulation/insolvency/insolvency-code-of-ethics
Rule 2340.4 states:
‘An insolvency practitioner, a firm or an associate shall not make or offer to make any payment or commission for the introduction of an insolvency appointment.’
That is not a disclosure requirement, this is an absolute prohibition. It is very, very clear.
The profession recognises that insolvency appointments must not be bought or steered by financial incentives.
Why?
Because insolvency practitioners owe duties not just to a client, but to:
• Creditors
• The court
• The public interest
Independence is not optional, it is fundamental.
But What About Receiving a Commission?
You sometimes hear this argument:
‘It may be prohibited for the IP to pay it, but it isn’t illegal for me as an accountant to receive it.’
Even if technically correct in some circumstances, legality is not the only test because ethical questions remain:
- Was the commission fully disclosed to the client and on a timely basis?
- Was informed consent obtained?
- Does receiving the commission create a self-interest threat?
The ICAEW’s Code of Ethics requires members to identify, evaluate and address threats to compliance with the fundamental principles, including self-interest threats.
Once a financial incentive sits behind a referral, independence is no longer intact.
The ‘Safe Pair of Hands’ Question
There is a much deeper issue.
If an accountant receives a proportion of the IP’s fee as an introductory commission, how does that accountant objectively assess:
• Whether the IP gave best advice?
• Whether all the options were discussed, including those for which an insolvency practitioner would not receive a fee?
• Whether informal workouts were properly explored?
• Whether solvent alternatives were considered?
• Whether the advice was truly client-first rather than fee-driven?
Suppose an informal restructuring might have been viable… Or a solvent wind-down was possible… Or a refinancing solution existed… Or a business sale… Ors a DS01 strike off… Or just ceasing to trade and allowing a creditor to petition?
If the accountant has already benefited financially from the appointment, are they truly independent in challenging the advice? Or are they compromised?
That is the uncomfortable reality. It is not about criminality, it is about independence.
Why The Insolvency Rules Are So Clear
Rule 2340.4 exists because the profession recognises something fundamental:
Insolvency appointments must not be influenced by financial inducement.
They must be based on what is right for the estate and creditors.
If the profession considers that principle strong enough to prohibit IPs from paying introduction commissions, then accountants must at least pause before accepting them.
Because once money influences referral decisions, the line between advice and incentive starts to blur.
Bringing It Back to PCRT
PCRT reinforces:
• Competence
• Integrity
• Professional judgement
• The need to act in the public interest
You can read the AI-related ethical guidance here:
https://www.tax.org.uk/sites/default/files/2026-01/PCRT%20-%20ethical%20use%20of%20artificial%20intelligence%20tools%20%E2%80%93%20Jan%202026.pdf
The themes are consistent:
Members remain responsible.
Members must apply judgement.
Members must avoid misleading conduct.
Referral arrangements do not remove accountability. Instead they intensify scrutiny.
Final Thought
Most advisers are trying to help their clients.
But good intentions do not remove conflicts.
If we are serious about:
• Raising standards
• Protecting independence
• Preserving public trust
Then we must apply ethical principles consistently… If R&D advice requires competence and disclosure … If insolvency appointments prohibit payments for introductions … Then referral arrangements (particularly undisclosed or substantial ones) deserve far more careful thought than they sometimes receive.
Because once financial incentive sits behind professional judgement, independence is no longer assumed, it must be defended.