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Parents to receive compensation for Tax-Free Childcare system failings

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HM Revenue and Customs (HMRC) has launched a compensation scheme for parents who have struggled to complete applications for Tax-Free Childcare since the service launched in April.

Parents affected by technical issues may be eligible to receive the government top-up as a one-off payment for Tax-Free Childcare. HMRC will also consider refunding any reasonable costs directly caused by the service not working as it should, mistakes or unreasonable delays.

People may be eligible for these payments if they have been unable to complete their application for Tax-Free Childcare, been unable to access their account, or not received a decision about whether they are eligible, without explanation, for more than 20 days

To make a claim, parents need to fill in a form online.

Parents need to send HMRC their full name, address, National Insurance number, bank details, copies of childcare provider receipts, and a brief description of the issues they faced when trying to apply for the childcare schemes.

Parents are required to log onto the Childcare Service website to sign up for two new government-funded childcare schemes: Tax-Free Childcare, and the scheme for 30 hours’ free childcare a week for all three and four-year-olds.

Under the Tax-Free Childcare scheme, the government tops up by £2 for every £8 parents pay approved childcare providers, via an online account.

The 30 hours’ free childcare scheme is eligible to parents who are in work, earning at least the minimum wage and up to £100,000.

Reported problems included HMRC systems not recognising applications from parents on maternity/paternity leave, or from those in receipt of carers’ allowance. Others reported significant delays with their eligibility code, meaning they could not pass them over to childcare providers in time.

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