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HMRC internal manual

Claimant Compliance Manual

From
HM Revenue & Customs
Updated
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Discrepancy Examinations: Action: Considering childcare discrepancy cases

Most childcare cases you look at will not be discrepancy cases. Even where a childcare provider informs HMRC of a different figure for childcare costs than the one previously declared by the customer, does not constitute a discrepancy and should be worked as an information request.

This is because we ask the customer to estimate their costs over the next 52 weeks, either from when the costs first started or after a reported change. This ‘weekly cost’ is an average over 52 weeks and could include periods in the year when the actual amount paid is higher or lower than the declared average.

In cases where we have contacted the provider and they have reported a different amount to the customer we must contact the customer to clarify the situation before making changes. We need to establish if there has been a change of circumstance (a change of £10 a week or more, expected to last longer than 4 weeks) or, if no change has occurred, to check how the customer worked out their average.

The only times that childcare could be correctly worked as a discrepancy are where,

  • we discover that the reported provider is not registered or approved. This would mean that the reported costs are unacceptable and should be retrospectively removed from the award
  • we contact the childcare provider to confirm costs and the provider tells us that the customer either no longer uses their childcare, or the customer’s children have never attended.

Even in the situations above you should use caution. It is possible that the customer has changed their childcare provider and either not reported the change, or they have reported the change and the details have not been captured.

Where the customer has provided details of how they calculated their average you should decide to accept what they say and depending whether their calculations are correct or not, you will either;

  • not amend the claim or award, see CCM17350 
  • use the information provided by the customer to amend the claim or award, see CCM17355 for pre-award cases or CCM17360 for post-award cases.

Any other differences are likely to be the result of customer error and/or failure to notify a change of circumstances and you should decide to amend the claim or award based on HMRC’s information, see CCM17370.