My client was paying childcare by voucher which mean money goes from employer straight into Childcare Voucher Company and then paid to the childcare provider, client does not even see the money.

Her child changed Nursery, in Scotland 3 year old get places at Local Authority nurseries, she reported change of circumstances and was asked to provide information about the salary sacrifice scheme which is the Childcare Vouchers,

She was asked to provide :

Contract of employment.
Payslips before and after the scheme
contract between employer and childcare provider
information was given to her by the childcare vouchers as a guide
contract of variation

what is all this about?

Thanks

P.S The salary sacrifice Scheme is soley used to pay for childCare (Nursery fees)

to whom did she report the change of circs, in what context, and who wants the information? that might help us (or someone) help you...

Sounds to me like the TCO are simply seeking clarification of the childcare costs and checking the eligibility before awarding childcare element of WTC.

If i'm not mistaken this scheme reduces the gross wage - used to determine WTC entitlement, although child care is still paid

I think...

Usually using wages to pay for childcare through the Salary Sacrifice Scheme means that you can deduct the amount you pay in from your gross annual income before declaring it for TC purposes. You then are only able to claim the Childcare Element of WTC for any childcare costs not covered by the vouchers.

i.e. You can only do one or the other either declare lower earnings or claim CC Element otherwise in effect you are claiming the additional WTC twice.

There are a number of reasons for the TCO asking these questions.

Firstly HMRC do not like Salary Sacrifice very much. This is where the employee and the employer renegotiate their contractual arrangements. The employee agrees to take a reduced salary and in exchange the employer provides a benefit with lesser tax implications than salary, in this case childcare vouchers.

So the first thing that HMRC look for is whether there is a proper and legally effective re-negotiation of salary.

The second thing is whether the individual has made such changes of circumstance notifications as are necessary bearing in mind that use of vouchers reduces the cash childcare outlay.

Finally, of course, it is unlikely that taking vouchers rather than salary is a good choice for the majority of lower income families.