What exactly is the fee a percentage of?

A percentage fee can apply to several different amounts: the tax credit, the cash refund, the reduction in tax, or even the qualifying expenditure the claim is built on. These are not the same number. On the shared illustrative example, 20% of a $250,000 credit is $50,000. If the same percentage applied to the qualifying spend behind the credit rather than to the credit itself, the fee would be a different figure altogether. Illustrative figures.

The base also decides timing. A fee on the amount claimed is fixed when the form is filed. A fee on the amount received waits for the money. The percentage of refund fees page shows the difference.

One sentence that names the base: "20% of the credit shown in the claim as filed", or "20% of the credit received from the tax authority". A statement of how a benefit that arrives as a reduction in tax, rather than cash, is counted. A worked example on your figures.

A percentage with the base left unstated. A base defined by a term the letter does not define, such as "the benefit" or "the value of the claim". A base that is the qualifying spend rather than the credit, without a clear explanation of why. Ask for the base to be written into the letter in words you can check.

• The clause: what counts as the benefit
• The script: asking how the fee is calculated
• Red flag: unclear fee base. Green flag: a fee you can work out yourself
• Contingent success fees