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Clare
Clare, Solicitor
Category: UK Tax
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Experience:  25 years exeperience as a high street solcitor
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Child Tax Credits:Recently received a letter to check our

Resolved Question:

Child Tax Credits:

Recently received a letter to check our Childcare costs, relating to my wife and I, for our son aged 7.

We have neglected to inform HMRC about the fact that we haven't used a registered childminder for over 2 years, but just pay cash to babysitters instead, no receipts, etc.

What's the best way of dealing with this Check?

Quite happy to cooperate, just want to minimise any liabilities, etc.
Submitted: 1 year ago.
Category: UK Tax
Expert:  bigduckontax replied 1 year ago.
Hello, I'm Keith and happy to help you with your question.

HMRC site is silent as to any documentary evidence needed to support a claim. This seems common these enlightened days.

Their advice is:

Why you need to work out your childcare costs

You need to work out your average weekly costs accurately if you're:
claiming help through tax credits for your childcare costs

Already getting tax credits and your childcare costs change - you may need to report a change in circumstances otherwise you may get paid too much - or not enough - tax credits.

What not to include in your costs

Only include childcare costs you actually pay yourself when using the GOV.UK calculator.

Don't include costs covered by any of the following:
childcare payments from your employer - either in money or childcare vouchers

Childcare vouchers in return for a reduction in your pay - this is called a 'salary sacrifice'

Childcare payments or grants from a Government Scheme, for example to help you start work or because you are a student

Childcare costs met by your educational or local authority for your child's nursery childcare

Your solution is to advise HMRC of what you are doing and provide a statement of the amount expended. It is always much better to get receipts, buy a book from any good stationers, just in case you get an inspection; highly unlikely!.
Customer: replied 1 year ago.

This answer is far too general.


 


Suggest you refer me to a specialist.


 


Thanks.

Expert:  Clare replied 1 year ago.
HI
Thank you for your question
My name is XXXXX XXXXX I shall do my best to assist you but I need some further information first
I fear I know the answer but I have to ask - were any of the babysitters formally approved or registered?
Clare
Customer: replied 1 year ago.

Hi Clare


 


No, the babysitters were not approved or registered.


 


I need to send in the paperwork requested today, to HMRC


 


 

Expert:  Clare replied 1 year ago.
Hi
How much have you been claiming in Child Care costs?
Clare
Customer: replied 1 year ago.

HMRC have old information about our Childcare costs, going back over 2 years, at £135 per week.


 


Some of their Award details are difficult to understand, and we receive £273 per month in child tax.


 


Our joint, self-employed income is £29,000. But they only want evidence of childcare provider, etc

Expert:  Clare replied 1 year ago.
Hi
The straightforward position is that you can only claim Child Care costs of you use an Approved or Registered provider.
You have not done so,
However you are correct it is usually impossible to work out what they are paying under which heading
In the circumstances your only option is to send the list of what you have paid and to whom and await details of how much you will need to repay.
I am sorry not to be more optimistic but sadly there is no positive answer I can give
Clare
Customer: replied 1 year ago.

As we don't have any proof of payments made to babysitters, etc - what are the possible actions HMRC may take in this situation, considering it's continued for over 2 years?


 


Most likely request child tax to be repaid? Or other?

Expert:  Clare replied 1 year ago.
Hi
The most likely outcome is a demand for repayment.
The system is still chaotic so the fact that this has happened is NOT likely to attract any other penalty
Clare
Clare, Solicitor
Category: UK Tax
Satisfied Customers: 29030
Experience: 25 years exeperience as a high street solcitor
Clare and 2 other UK Tax Specialists are ready to help you

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Clare
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25 years exeperience as a high street solcitor