HMRC tells childminders to repay thousands in tax credits

Childminders must now prove their business is being run to make a profit or could be forced to repay thousands of pounds in backdated tax credits.

Childminders must now prove their business is being run to make a profit or could be forced to repay thousands of pounds in backdated tax credits.

HM Revenue & Customs began sending letters to childminders who claim Working Tax Credits (WTC) last July, asking them for evidence including business plans, examples of advertising and addresses of customers.

Since then, many childminders have had their credits stopped and received bills from HMRC running into the thousands of pounds.

The move is part of a blanket change to WTC eligibility for the self-employed, announced in the 2015 Budget.

Grassroots childminding networks are rallying together to question why childminders are not receiving the same tailored response as they do for their annual tax returns. Many low-income and part-time childminders fear the loss of WTC will put them out of business.

Sarah Neville, a registered childminder who runs the website Knutsford Childminding Resources and a childminding Facebook group of more than 17,000 members, said the network has been inundated with concerned childminders either reporting they have received the letters or anxious they will do.

‘It is a big worry for a lot of people, and it’s likely to affect thousands,’ she said. ‘We put up a post about the letters asking for feedback and received over 300 replies.

‘Normally, when you get tax credits, you know it’s not forever, but at certain times we need a little bit of help – say if you want to get a degree to become more qualified, then you can only work four days a week so are in need of a top-up; or you are an older childminder who just wants to have two children three days a week: now [HMRC is] doing these audits, it will be harder for them to continue.

‘HMRC is saying, “Where’s your business plan? And your advertising’s not good enough.” The fact is, many childminders work incredibly hard but can’t grow their business. They’re not taking the mickey, it’s just that’s how their business works. As a childminder there are lots of limiting factors to your earning capacity and ability to make a profit, such as ratios, the size of your house, operating in a rental property and, of course commonly, looking after your own children.

‘And the biggest point is that these childminders are providing a valuable service – the Government needs them for their future childcare plans.’

Ms Neville added that when childminders successfully provide evidence in response to the first letter from HMRC, they then receive a second letter asking for even more information about their business.

HMRC told Nursery World, ‘As announced in the 2015 Budget, from 6 April 2015 all claimants who are using self-employed work to qualify for WTC must be able to show that they are trading on a commercial basis and that their work is undertaken with the intention of making a profit.

‘HMRC is checking new and existing claims for WTC where there is a risk that they may not meet the test that has applied for self-employed WTC claimants since April 2015. The aim of the test is to ensure that claimants meet the eligibility requirements, in particular that they are working for the required number of hours a week.

‘HMRC checks claims for WTC in this way to make sure that claimants do not receive overpayments in error, as this could mean that they potentially have to repay a larger amount at a later date.’

HMRC said it consulted with groups that included Working Families and Child Poverty Action Group.

The department also claimed that ‘early indications are that childminders form a small proportion of those we have asked for information about their self-employment’.

Liz Bayram, chief executive for the Professional Association of Childcare and Early Years (PACEY), said, ‘PACEY understands that the Tax Credit Office is contacting some self-employed claimants of WTC with average earnings below the minimum wage and asking them to provide detailed business records and evidence that they are trying to make a profit. Childminders are self-employed, and a small number receive WTC for a variety of different reasons.

‘We are in regular contact with HMRC and the Department for Work and Pensions to ensure officials have a better understanding of the realities of childcare businesses and how changes to WTC and the roll-out of Universal Credit may affect PACEY members.

‘HMRC has committed to work with PACEY to ensure that future requests of childcare professionals reflect their working arrangements. We have also been given reassurance from HMRC that providing a business plan may not always be appropriate for a childminding business and that this will be taken into account.’

Source: Nursery World

Younger parents 'feel burnout'

‘Millennial parents’ share family responsibilities more than previous generations and are twice as likely to complain of burnout than any other, a survey found.

Forty-two per cent of parents born between the early 1980’s and the end of the 1990’s, said they felt energy-sapped most or all of the time, compared with 22 per cent of 36 to 45-year-olds and 17 per cent of over 45’s.

Thirty eight per cent of millennials said they would take a pay-cut to better achieve the elusive work-life balance. This was compared to 28 per cent over all.

Career progression that means working long hours and missing out on family life is less appealing to younger parents, according to the research in the 2016 Modern Families Index.

Higher earning respondents to the survey of 1,000 parents with a child aged 14 or under, were more able to access flexible working arrangements.

Denise Priest, director of strategic partnerships at nursery care provider Bright Horizons, which co-managed the survey, said, ‘The 2016 Modern Families Index shows that millennials are doings things differently at work and at home, and have a strong desire to be involved with their children and families.

‘This is the new generation of parents who are rebooting traditional working and caring patterns, but also challenging embedded notions of engagement and loyalty in the workplace. However, these increased expectations continue to bump up against working commitments, leading to stress and in some cases burnout.’

Sarah Jackson, chief executive of charity Working Families, said: ‘The sands are shifting – younger parents are more likely to share care than the generations before them. But they're on shaky ground because working life hasn’t caught up.’

Last year's survey revealed more than a third of fathers have faked illness to meet family commitments.

Source: Nursery World

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