Tax credits claimants reminded to report changes in childcare

Tax credits claimants are being reminded that they must let HM Revenue & Customs (HMRC) know within one month of their childcare costs falling or ending. Deliberately failing to let HMRC know when renewing a claim could constitute criminal fraud and result in prosecution.

As part of a wider government crackdown on error and fraud in benefits and credits, letters will start to land on doorsteps this week asking claimants to contact HMRC if their childcare costs have changed, for example, because their child has started school.

Because tax credits are flexible, the amount claimants receive changes as their circumstances alter.

Changes to childcare that claimants need to tell HMRC about include:

Average childcare costs end or go down by £10 a week or more.
Their childcare provider stops being approved or registered.
They start getting childcare vouchers from an employer.
They start getting early learning or nursery education support.

Some 345,000 or 4.5 per cent of all tax credit awards in 2008/09 had errors relating to childcare. The potential size of this loss to the Exchequer is £380m.

In October HMRC and the Department for Work and Pensions launched a strategy to tackle error and fraud in benefits and credits.

Exchequer Secretary to the Treasury David Gauke said: "There is too much error and fraud in our benefits and tax credit systems. These losses are unfair, unaffordable and unacceptable. In October the Government therefore launched radical new proposals to reduce the billions lost every year. We will now use credit reference agencies and data matching to spot patterns of fraud. We are also employing more investigators and will investigate each claim in high-fraud areas. We have to make every penny count - and that includes going after the cheats at every level."

For more information, visit hmrc.gov.uk.