Problems with the childcare tax credit need to be sorted out by the Inland Revenue if the childcare strategy is to succeed, the Scottish Childminding Association (SCMA) has warned.
The Inland Revenue launched a consultation last month setting out plans to create two new UK-wide tax credits from 2003, an integrated child credit and an employment tax credit. These credits would replace existing schemes (see news, 26 July). The childcare tax credit, which families currently can claim for up to 70 per cent of their eligible childcare costs, would become part of the new employment tax credit.
Maggie Simpson, the SCMA's national development officer, said that if the Government wanted to continue to expand provision in line with the national childcare strategy it was crucial that the childcare tax credit should work.
She said, 'If it's going to work the system has to be responsive and flexible, and the childcarer is going to have to be confident about taking on people who claim childcare tax credit. At the moment the parent has to apply for everything at the same time - the childcare tax credit within the Working Families Tax Credit. That's a problem if you are going into employment but don't have your childcare sorted from day one.
'Parents also need to be well-advised about everything. At the moment they take a job, apply for childcare tax credit, then realise they are no longer getting housing benefit and don't have as much income. The Inland Revenue is going to have to be very responsive to people's often chaotic returns to work.'
The consultation document, New Tax Credits - Supporting Families, Making Work Pay and Tackling Poverty, seeks views on whether the childcare tax credit element of the new employment tax credit should be paid direct to the main carer in the family, who is most likely to be responsible for organising childcare, or through the wage packet.
The document also seeks views on requiring the family to notify the Inland Revenue of changes in childcare, and on requiring claimants to verify the information they provide about childcare arrangements and costs with receipts or confirmation in writing from care providers.
However, Ms Simpson suggested that it should be the childminders who notify the Inland Revenue of changes. 'They would obviously do that very quickly because they've got a vested interest in making sure that their accounts are accurate,' she said.
The SCMA has already expressed strong concerns about how the childcare tax credit is working, amid reports of fraud. In November last year, SCMA director Anne McNellan warned that there would soon be a crisis if changes were not made to the system. An increasing number of registered childminders had complained to the SCMA about parents who were claiming the childcare tax credit falsely, signing up for childcare places and then not using them or paying for them - a problem that has also affected childminders in England and Northern Ireland.