Hi all

I've had a query that I've never come across before and judging from the response from the helpline neither has the inland revenue..!!!

A client of mine has three children, one is in the care of childminder full time, the other two are in full time education. My client pays £140 for the child in full time childminder care but also pays £50 per week per child for the older two (a sort of retainer fee) to keep their place available at the childminder for school holidays, training days, sickness etc. When the older two children are in the care of the childminder the fee stays at £50 per week.

The 'compliance team' of tax credits are not sure this 'retainer fee' is payable under child care costs but the helpline assured me today that it is, they say that regardless of whether the child attends the childminder or not if a fee is charged for their care then it's payable under tax credits.

Any help or guidance would be much appreicated.

Sarah

Hi Sarah

I’ve not come across this either so what follows is only speculative. Reg 13 of the Working Tax Credit (Entitlement and Maximum Rate) Regulations 2002 allows for a childcare element where “relevant childcare charges” are “incurred”.

Reg 14(l) states that charges incurred are charges paid for childcare “provided”. These are known as “relevant childcare charges”. Apart from a reference in reg14(2) to childcare provided by a school or local authority there is no reference to the period over which the childcare is provided other than in actually calculating the charge.

Reg 15 specifies that an average weekly charge must be calculated. So, say the childminder was to only apply charges during the vacations but includes an amount totalling the weekly retainers. In other words charged only at the time of the childcare actually provided. The IR would still have to calculate a weekly amount, which is capped anyway.

There is only one way to find out. Claim the costs and appeal if refused. You may establish some case law on the subject.

Regards
Paul

So the main issue here is whether the arrangement described by Sarah would constitute 'Child care' as referred to in Reg 14. If there is a problem, it may be that the arrangement is more about paying for a child care need contingency, rather than actual care. This might not fall the clients way if the matter ended up at appeal, especially if the LQPM decided to consider what the intention of the TC child care scheme is. A charge of £100 per week to keep a space open/fill possible additional needs may be perceived as a 'nice little earner', and not attract the essential sympathy that is sometimes needed to persuade decision makers to see things our way.

Paul is surely right about having a go. But what if the Revenue pay now, and then decide next year or whatever it was a terrible mistake? With the current collapse of favourable write off rates on overpayments (see Ombudsmans report), I would not be surprised to see the Revenue repeat their familiar recovery justification of 'you should have known we had got it wrong'! But maybe I am being too pessimistic.

Steve

Just a quick update:

Tax credits have paid the retainer. Apparently they have checked with their specialist section (who ever they may be)and they have given the thumbs up.

thanks for your replies

Thats what we like to see, first class decision making.

until they change thier mind and ask for it back...

Tony, how cynical!

I tried to look at this scenario, from the point of view of the new COP26. It is a Revenue responsibility to give correct advice based on info supplied. The claimant has a linked responsibility to give accurate info. So if client has briefed the Revenue accurately regarding the nursery costs, but the Revenue then makes a mistake, it looks like the client would be ok.

But is there a phone recording of the Revenue saying all is well? If not, how would client prove they have discharged their responsibilities etc? Maybe need to write a letter.

Steve

This issue has come up for me with a single claimant who has been incapable of work for 26 weeks and receiving childcare element (she is continuing to incur costs).

My colleague advised that client shouldn't continue to get CCE. Client phoned TCO and was told she could get CCE becuase she was actually paying CC costs (same interpretatin as Nevip). Client is confused.

I checked the regs and, as much as I'd really like to, I just can't agree with the TCO. Reg 13(1)(a) WTC(EMR) regs clearly says that for a single claimaint to get CCE, they must be "in qualifying remunerative work".

I've considered if the 'treated as' provisions apply (see thisw thread: http://www.rightsnet.org.uk/dc/dcboard.php?az=show_topic&forum=104&topic_id=2866&mesg_id=2866&listing_type=&page=) because in reg 13, for the definition of 'qualifying remunerative work' we are directed to reg 4 - but I can't make them stick because the heading to reg 4 is to the basic element of working tax credit.

I told the client I'd get a second opinion...

ps - I'm going to buy myself a pint becuase I've finally managed to get something in bold! Yay!!!

Sorry - not so I can see it (the bold I mean). But have that pint anyway.

any takers...?

Thats very kind of you Tony! I'll have a pint of bishops finger. And that'll be quite enough out of you lot!!