A fundamental flaw in the childcare element of the Working Tax Credit system means early years providers are unprotected by the Treasury's rules around fraud, CYP Now has discovered.
The loophole is forcing settings to chase unpaid fees in small claims courts, where they are often awarded meagre monthly repayments in place of full compensation.
Nursery owner Anne-Marie Paul allowed a parent to run up a bill of more than £7,000 in one of her settings in Romford. The parent proved she was awaiting delayed tax credit payments by calling HM Revenue and Customs (HMRC) - which delivers the Treasury's policies - from the nursery, but eventually pulled the child out of the nursery leaving the fees unpaid. Paul reported the fraud to HMRC but was told the parent had not broken any rules.
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