The issue was highlighted last month when Joanne Welsh, a Tyneside hairdresser, was jailed for five months after admitting she had falsely claimed nearly 26,000 in tax credits, including childcare costs over three years that she had not incurred.
Jennifer Hayes, development worker at Hurley Pre-school in Kennington, London, said it appears to have become easier to cheat the system since the Government introduced changes to the way parents apply for tax credits.
Since April 2003, parents are no longer required to get providers to sign forms confirming that a child is attending a setting and how much it costs.
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