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TFC30600 | Childcare accounts: imposing restrictions on childcare accounts

From HM Revenue & Customs · Tax-Free Childcare Technical Manual

Childcare Payments Regulations 2015, regulation 18

HMRC may restrict the use of childcare accounts by preventing qualifying payments being paid into the account (which will mean that the account holder will not receive further top-up payments) and/or preventing payments being made from the account for qualifying childcare (with the effect that the account holder will be unable to spend top-up payments on childcare). The circumstances in which HMRC may do that are set out below:

  • the account holder has an outstanding debt relating to their childcare account because HMRC has assessed an amount of top-up or penalty that is now due and payable. This reflects regulation 18(1B) and (2) – so would apply to the restrictions on payments being made into the childcare account (see regulation 18(1))

  • the tribunal has found in favour of the person on review or appeal in relation to tax credits or Universal Credit and the person must repay top-up received whilst proceedings were ongoing. This reflects regulation 18(1A) – so would apply to the restriction on payments being made into the childcare account (see regulation 18(1))

  • stopping the existing childcare account from being active is a necessary first step for HMRC to take in allowing another person to have the active childcare account for the qualifying child. This reflects regulation 18(3) so would apply to the restriction on payments being made into the childcare account (see regulation 18(1))

  • a person wants to apply for or make a declaration of eligibility for 30 hours free childcare in respect of a child but is prevented from receiving 30 hours free childcare because another person holds an active childcare account in respect of that child. This reflects regulation 18(3A) so would apply to the restriction on payments being made into the childcare account (see regulation 18(1))

  • a person agrees with HMRC that an account restriction should be made

  • HMRC has reason to believe that payments made from the account would be fraudulent and that it would not be able to recover any top-up lost. This reflects regulation 18(5) so would apply to the restriction on payments from a childcare account (see regulation 18(1))