Claims for working families tax credit (WFTC) run for a six-month period, and it is only possible to apply for the childcare tax credit (CTC) element at the beginning of a claim. Maggie Simpson, national development officer for the Scottish Childminding Association, described this as one of the 'stupid anomalies' of the system because it does not take account of changes in parents' circumstances.
She said the inflexibility of the system sometimes prevented CTC from helping unemployed parents back into work - one of the key aims of the system. For example, she had come across one mother who was unable to pay her childminder because the childminder was going through registration but had not yet completed it, and so was ineligible for childcare tax credit. 'The upshot was that they both gave up work,' Ms Simpson said.
It is possible to 'book' a claim for CTC in advance at the beginning of the six-month WFTC period if the parent is able to provide details of the registered provider - as a parent of a school-age child might wish to do to cover school holidays. 'However, if you don't know who your registered provider's going to be, you're stuck,' Ms Simpson said.
She said parents who work part-time but are then offered more hours also face problems as they cannot alter their application for CTC within the six-month claim period. 'It's not clear if they can put in a back claim. In that situation, they are either going to have to give up the job or can't take on additional responsibilities.'
There have also been concerns over abuse of the tax credit, after a number of childminders complained that parents would sign up with them for the six-month claim period, then not use the place. This prompted fears of fraud, but in some cases it could simply have been caused by parents' circumstances changing, for example if they lost a job.
Ms Simpson said the Inland Revenue now appeared to be checking up more thoroughly on these cases and had invited providers to report them, though providers were not asked to make a judgement about why a parent had not taken up a place. This had reassured childcarers that their concerns were being taken seriously.
However, parents claiming CTC found that some providers were unwilling to take them on at all. 'In one instance, the childminder had been caught out too many times before where arrangements had changed and said to the parent, "If you stay with me for a month, then I'll sign the form". But the parent couldn't afford to do that,' Ms Simpson said.
She stressed that there were many people who had gained from the introduction of CTC. 'But what a shame it's still marred by bureaucracy,' she said. 'It should be evolving.'
An Inland Revenue spokeswoman said, 'We are listening and we are taking notice. The Revenue and the Treasury are in contact with interested groups over a range of issues around tax credits, and will continue the dialogue. They are building on the current success of the childcare tax credit, making work pay for parents, and plan to do so with new tax credits from 2003.'