UK Bribery Act and referral fees: what disclosure and adequate procedures mean

Are referral fees legal under the UK Bribery Act?

A referral fee is not unlawful in itself. The risk comes from who pays whom, whether the person receiving the money owes duties to someone else, and whether that someone knows. An undisclosed payment to a person who advises a client can be treated as a secret commission or as bribery, depending on the facts. Which label fits is a question for a UK lawyer.

For a UK adviser considering the SourceX partner program, the practical answer is to treat disclosure and written terms as the baseline. This is general information, not legal, tax or financial advice. Confirm with your own counsel or professional body before acting.

The program facts that matter here are simple. Partners earn 25% of the eligible platform fees SourceX actually collects from the referred company's licensing deals, capped at $100,000 cumulative per referred company. The reward is a share of SourceX's fee and is never deducted from what the company receives. Nothing is payable until the buyer pays and SourceX receives its fee.

What does the Act actually cover?

The Bribery Act 2010 creates offences of bribing another person, being bribed, bribing a foreign public official, and, in section 7, a commercial organization failing to prevent bribery by a person associated with it. The Act's text is published on legislation.gov.uk, and the Ministry of Justice has issued guidance on the section 7 defense of having adequate procedures. Read both in their current form rather than relying on this summary. The secret-commission position under other UK law is outside this page, so put it to your solicitor.

Two ideas drive most referral-fee analysis:

• Improper performance. The offences turn on a function or activity being performed improperly, for example in breach of a duty of good faith, impartiality or trust. A recommendation you give while secretly paid by the other side is the classic worry.
• Association. A commercial organization can be exposed through people who perform services for it. If your firm refers clients and is paid for it, think about whether you are the associated person, or whether SourceX is the organization whose procedures matter.

Which introducer situations raise a flag?

How does the SourceX structure help, and where does it not?

Three features reduce the risk. First, the reward is paid by SourceX out of its own fee, so the company's proceeds are not reduced and the company is not paying the introducer. Second, nothing is binding until the company agrees price and terms and signs, so the introduction does not decide the outcome. Third, partners make introductions and give basic fit information only, and never handle confidential records.

These features do not remove the duty-of-loyalty question. If you are the company's adviser, the company is entitled to know that you may benefit if it licenses data.

What disclosure and written terms look like in practice

1. Read the program terms and keep a dated copy of what you accepted.
2. Write a one-page note for the file saying who you are introducing, in what capacity you know them and whether you advise them.
3. Disclose in writing, before the introduction, that you may receive a share of SourceX's fee if a licensing deal completes and is paid.
4. State that the reward does not reduce the company's payment and that the company is free to decline.
5. Keep a record of the introduction, the response and any reward paid.
6. Refuse any request to route value to an individual decision-maker at the company.

What about the tax paperwork on a UK payee?

This is separate from bribery law. For a UK individual paid from the US, the IRS describes Form W-8BEN as a certificate handed to the payer on request. A UK company uses W-8BEN-E instead; see filling out a W-8BEN-E for a consulting firm. Treaty claims and UK reporting are questions for your tax adviser.

Questions for your solicitor

• Do my engagement terms with the company require me to disclose third-party rewards?
• Does my professional body, such as the Law Society, ICAEW or FCA-regulated firm policy, impose further limits?
• Am I an associated person of any commercial organization in this chain, and what procedures does that organization expect?
• Should the arrangement be documented in a short side letter?

For how neighbouring regimes frame the same issue, see the notes for Irish accountants and Dutch accountants.

Next step

If counsel is comfortable, register as a partner. Read the UK partner guide for the practical introduction flow, check whether non-US residents can join, and use the referral earnings calculator to understand the formula. Rewards are not guaranteed, and final terms are set by the signed agreement.