Technical issues with a new childcare scheme has resulted in HMRC offering compensation to those worse off as a result.

'Tax-Free Childcare' was introduced earlier this year to help working parents meet their childcare costs. There have been a number of issues, however, with the online site causing significant delays in processing of online applications.

Some months on, parents are still not receiving timely responses in certain cases. As a result, many have been left out of pocket, with childcare costs still to pay but without receiving the government top up.

The new scheme is an alternative to the existing childcare vouchers scheme and can save tax of up to £2,000 per child, per annum.

For every £8 contributed by the parents, HMRC will automatically top up the account with an additional £2, up to the annual limit of £2,000 and split into quarterly limits of £500. This money can then be used to pay registered childcare providers directly.

Nick Haines, partner and Head of the Tax team at Hazlewoods, the Gloucestershire based accountants (pictured) said: "This is another example of an online system introduced by HMRC which is not functioning as expected. We can only be thankful that the timetable for Making Tax Digital (MTD) has been put on the back burner."

HMRC has confirmed that it will look to compensate certain applicants who have been affected by technical issues with the online account.

You may, therefore, be eligible to apply for compensation if you have:

• been unable to complete your application;

• been unable to access your online childcare account; or

• not received a decision on whether you're eligible for more than 20 days without any explanation.

To apply for compensation you must, somewhat ironically, complete an online form, before printing it and posting to HMRC! A link to the form can be found at https://goo.gl/XFsY6Q

If you would like to find out more as to whether you could be eligible for tax-free childcare please contact Hazlewoods on 01242 237661.

www.hazlewoods.co.uk