What Happens In A Child Care Investigation For Tax Credits?

If you are wondering what happens in a child care investigation for a Tax Credits claimant, you will find the answer to your question in the following blog post where we will discuss the investigation process, the evidence you may need to provide and give some advice on how to maintain accuracy in the child care costs you claim.

What Happens In A Child Care Investigation For Tax Credits?

When a claimant is under investigation for child care regarding their Tax Credits claim, the HMRC is likely to check the details of their claim to confirm that the grounds on which the claimant’s application for Child Tax Credits was approved are still applicable.

For this, they would ask the claimant to provide evidence regarding the following:

  • their income and any changes to it
  • their working hours and any changes to them
  • their childcare expenses
  • whether or not their child (or children) is under an approved or registered childcare provider
  • if childcare costs are being paid by someone else
  • if the claimant is still the one responsible for the child’s primary care

These are the basic elements that determine a claimant’s eligibility to claim Child Tax Credits as well as the amount that they get. If there are changes to any of these elements, claimants are expected to report such changes in circumstances to the HMRC so that their benefits payments can be adjusted accordingly.

If a claimant does not update the HMRC with a circumstantial change that affects their payments for Child Tax Credits and the authorities have reason to believe that the change(s) has indeed occurred (and will impact future benefits payments) an investigation for child care will be set by them.

Such investigations usually start with the HMRC sending a letter to the claimant; informing them of the start of an investigation regarding their benefit claim (the child care element of Child Tax Credits, in this case); as well as asking the claimant to provide evidence of any or all of the elements listed above that impact their Tax Credit claim as well as the amount they qualify for.

If the claimant can provide the required information and there is no circumstantial change, their benefit payment will continue as usual. In the case of an unreported circumstantial change, the HMRC can reduce future payments for the child care element of Tax Credit (mainly Child Tax Credits), sanction the claimant for benefit fraud and deliberately withholding key information or ask the claimant to pay back the overpaid amount that they’ve received from them.

If there is an ongoing investigation for child care regarding a Child Tax Credits claim, payments are not stopped or reduced during the process; until the investigation is complete and there is a lack of required evidence.

Investigations regarding the child care element of a Child Tax Credits claim can be made at the beginning, during or end of the claim period and the authorities can ask for information as far back as 5 years.

The authorities can follow up with a phone call or a scheduled meeting (with your agreement) during an investigation. They may also ask you to sign a copy of the notes that they take during a one-to-one meeting with you regarding your claim. 

How Can You Make Sure That Your Child Care Costs Are Accurate If You Claim Tax Credits?

To make sure that the child care costs that you are claiming as part of your Child Tax Credit claim from the HMRC are accurate, you should be sure of the amounts that you can claim as well as those that you can’t.

The child care costs that a claimant can claim include costs incurred in person for child care. This includes costs incurred for a registered:

  • child care provider 
  • foster carer 
  • carer or nurse 
  • childminder, playscheme, childcare club or nursery

In addition to this, claimants can also consider child care services provided by the school that their child (or children) attend.

Child care costs that cannot be claimed include the following:

  • childcare vouchers received from an employer in return for a reduction in pay
  • childcare costs that are taken care of by the local education authority such as the cost of 15 hours each week for free early years education for children aged 3 and 4
  • payments received from the government if you are a student or starting work
  • child care provided by a family member or a relative

What Is Considered Change Of Circumstances For Child Care Costs If You Claim Tax Credits?

A claimant is said to have experienced a change of circumstances for child care costs while claiming Child Tax Credits in case of any of the following situations:

  • earnings increase by more than £2,500
  • average weekly childcare costs change by at least £10 per week
  • child care costs reduce to nil 
  • the child stops living with the claimant
  • a childcare provider is no longer registered

Claimants are required to report changes affecting their child care costs (including factors that affect their Child Tax Credit claim) to HMRC within a month of their occurrence; otherwise, they can face a fine of up to £300. Most changes can be communicated to the authorities online using the Government Gateway user ID and password.

What Happens When You’ve Been Overpaid For Child Care If You Claim Tax Credits?

If you have been overpaid tax credits by the HMRC, they will inform you of the amount that is due from your end and the mode of repayment. However, how you repay an overpayment of tax credits to HMRC depends on the following factors:

  • the claimant still gets tax credit payments
  • the claimant has moved to Universal Credit
  • the claimant is not receiving Tax Credit or Universal Credit payments

Claimants who still received payments for Child Tax Credits or those who have moved to Universal Credit can expect that the HMRC will simply reduce their future payments for child care if they’ve been overpaid by them earlier. 

On the other hand, if the claimant is no longer eligible for payments regarding Tax Credits or Universal Credit, they will be sent a “notice to pay” by HMRC which must be paid within the next 30 days. 

If you need further advice on debt repayment for Tax Credits, you can get free debt advice from non-profit groups such as Citizens Advice Bureau or StepChange.


The above discussion covers the details of the investigation that a Tax Credits claimant can expect if they get the child care element as part of their claim. One must make sure that their calculations for child care and evidence in support of their claim are updated and recorded so that they can provide these during such an investigation.


Working Tax Credit: help with the costs of childcare

What if my claim is checked by HMRC? | Low Incomes Tax Reform Group

Tax credits: work out your childcare costs – GOV.UK

How do I claim the childcare element of working tax credit?