Nursery tax fraud fears

Nursery owners say the problem is growing

Nursery owners in Scotland are warning that the government's new child care tax credit is being widely abused.

The Working Tax Credit scheme allows families to claim up to £7,000 a year towards child care.

But since it came into effect in April, nurseries have reported an increase in "phantom bookings".

Nurseries suspect many parents are simply trying to get the necessary information to cheat the system - and have called for tighter regulation.

The Inland Revenue is warning fraudsters it will be making checks with childcare providers.

However, it said there were no plans to review the system in the wake of the claims.

Leslie Beber, owner of the Little Acorns nursery in Portobello, said fraudulent claims were a growing problem.

Under the old system, nursery owners or child minders had to fill in part of the application form to confirm childcare was being provided.

Genuine parents come along and in many cases we have to turn them away Nursery owner Leslie Beber

But since April it has been up to parents to provide the necessary information.

Leslie Beber said: "What we have noticed is quite a lot of people making applications to come to the nursery, and then not appearing.

"In one or two instances I attempted to phone the prospective parents but discovered, of course, that the phone number was a fictitious one.

"In good faith we accept those bookings that are put into the system and take up a place - then genuine parents come along and in many cases we have to turn them away.

"It's happening in Glasgow, Inverness - everywhere, and it's a big problem."

'Trusting people'

Stuart Riddell, head of the Association of Certified Chartered Accountants Scotland, said it was important to strike the right balance between investigating claimants and trusting parents.

He said: "I think you have to bear in mind that every system is open to abuse at some stage.

"But it's usually by a small number of people. If there are an increasing number of fraudulent claims then the government should look at some kind of audit.

"However, it's a difficult balance to strike - with auditing and monitoring on one side and trusting people on the other."

A spokesman for the Inland Revenue said there were no plans to review the system.

He said: "We expect people who make a claim to us to provide us with accurate information.

"We do check claims and undertake checks with childcare providers so if we do come across instances where this is being abused, we would certainly follow up on that.

"We have a set system and to change that system would be a matter for ministers to undertake."