Childcare vouchers debacle
Bigstu07
Posts: 8 Forumite
Good morning all, newbie here.
I entered into a salary sacrifice scheme at my place of work to purchase childcare vouchers (Accor) for our 3 boys childcare costs. I paid £200 per month for the vouchers of which the nursery fees varied above/below this amount each month. Upon our eldest and middle sons moving into fulltime education, the monthly fees at the nursery reduced, but with myself working shifts and my wife working part-time (mon-wed) we decided to maintain the £200 sacrifice as during school holidays we would then use the out-of-school facility that the nursery offered. This was going along quite well with a slight surplus accruing in the nursery account.
When son No3 started full time education I reduced the monthly amount to £50 (to stay in the more beneficial initial childcare voucher scheme), with the accrued previous amount plus the reduced monthly payment this meant our account still built up - to a silly amount of approx £800. The nursery manager then came and requested me stop paying/buying the vouchers, I spoke to somebody at my employers HR dept who told me I could take a payment holiday with no penalties, which I decided to do. When the new tax year came around and we were still well in credit, we decided to stop the scheme.
We continued to use the nursery for childcare needs but on a significantly reduced basis and received basic monthly (sometimes not) statements of an opening and closing amount but no breakdown of expenditure, showing our account to be in credit but reducing all the time by a small amount.
In early October we received a statement showing us to still be in credit, so imagine our surprise and disappointment when we received a letter along with a fully itemised (full breakdown of attendence) statement, saying that the Nursery's 'First Steps' software package which works out their accounts had been adding £96.00 each month to our account. This amount was never illustrated on the statements we received, if it had we would have flagged it up immediately, and has gone on for over 12 months from the time that the nursery manager requested ourselves to stop paying into the scheme.
The nursery now say that we are actually £750 in arrears and understand that we may not be able to pay the amount outright but would like us to come to an arrangement to pay this amount off.
If I had continued to sacrifice my salary, then this amount from my wages would be 40% less due to my tax code and the error is not from my doing but from the nursery's system.
We NEED to use this nursery due to myself working shifts and my wife working part-time, so have to tread carefully with how we deal with this issue -ALL advice will be greatly received.
Where do we stand legally, as this amount has built up over 12 months and we never received the full itemised bills where we would have immediately seen the £96 going in every month and flagged it up with the nursery, thus not getting into arrears. By their own admission, the nursery state it was their software programs fault.
Cheers,
Stu
I entered into a salary sacrifice scheme at my place of work to purchase childcare vouchers (Accor) for our 3 boys childcare costs. I paid £200 per month for the vouchers of which the nursery fees varied above/below this amount each month. Upon our eldest and middle sons moving into fulltime education, the monthly fees at the nursery reduced, but with myself working shifts and my wife working part-time (mon-wed) we decided to maintain the £200 sacrifice as during school holidays we would then use the out-of-school facility that the nursery offered. This was going along quite well with a slight surplus accruing in the nursery account.
When son No3 started full time education I reduced the monthly amount to £50 (to stay in the more beneficial initial childcare voucher scheme), with the accrued previous amount plus the reduced monthly payment this meant our account still built up - to a silly amount of approx £800. The nursery manager then came and requested me stop paying/buying the vouchers, I spoke to somebody at my employers HR dept who told me I could take a payment holiday with no penalties, which I decided to do. When the new tax year came around and we were still well in credit, we decided to stop the scheme.
We continued to use the nursery for childcare needs but on a significantly reduced basis and received basic monthly (sometimes not) statements of an opening and closing amount but no breakdown of expenditure, showing our account to be in credit but reducing all the time by a small amount.
In early October we received a statement showing us to still be in credit, so imagine our surprise and disappointment when we received a letter along with a fully itemised (full breakdown of attendence) statement, saying that the Nursery's 'First Steps' software package which works out their accounts had been adding £96.00 each month to our account. This amount was never illustrated on the statements we received, if it had we would have flagged it up immediately, and has gone on for over 12 months from the time that the nursery manager requested ourselves to stop paying into the scheme.
The nursery now say that we are actually £750 in arrears and understand that we may not be able to pay the amount outright but would like us to come to an arrangement to pay this amount off.
If I had continued to sacrifice my salary, then this amount from my wages would be 40% less due to my tax code and the error is not from my doing but from the nursery's system.
We NEED to use this nursery due to myself working shifts and my wife working part-time, so have to tread carefully with how we deal with this issue -ALL advice will be greatly received.
Where do we stand legally, as this amount has built up over 12 months and we never received the full itemised bills where we would have immediately seen the £96 going in every month and flagged it up with the nursery, thus not getting into arrears. By their own admission, the nursery state it was their software programs fault.
Cheers,
Stu
0
Comments
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I understand your pain with this.
Personally, I would approach on a middle ground... yes it is their software that calculated the account incorrectly - however you will still need to pay the dues.
Think about it in reverse (I find it appeases me when other people screw up!) - what if your payroll's computer was in error and paid you £96 less per month.. I'm pretty sure you would want your due money when the mistake was discovered.
The salary sacrifice situation is what will likely be the sticking point, I'm not au fait with childcare vouchers but should the NI not be taken into account too? (2% if you're a higher rate tax payer).
You mention '40% less due to my tax code', but I assume you mean 40% as you're a higher rate tax payer?
I would contact the nursery (via letter) explaining the above - you don't mind paying what's owed etc. but as the problem is due to their software and you would have otherwise purchased via salary sacrifice then you deem the same 'discount' to be applied. See how they respond and take it from there.I was a DFW, now I'm a MFW :T0 -
I may have misunderstood what is obviously a complicated issue.
My experience is that nurseries in this situation are helpful (and so they should be!)
Can you start the scheme again? If so, I suggest you do so.
Reach a settlement amount with the nursery, work out over how long you intend to repay it, and use the vouchers. Don't be afraid of driving a fairly hard bargain, whilst telling them how much you value them.
You may feel that the amount you are prepared to settle for depends on whether they are a chain making profit for shareholders, a small family operation, or a community run group (the latter would find £750 a huge amount to lose)0 -
I agree with the above -the only question I would ask -Did you not know yourselves how much the childcare was actually costing? Having had to use childcare now for 17 years I always work it it myself as the nursery often made a mistake particularly when there was the pre-school voucher thing and since we started using childcare vouchers I keep a spreadsheet so i can predict what vouchers to take as my work only lets you change once a year.0
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Reach a settlement amount with the nursery, work out over how long you intend to repay it, and use the vouchers. Don't be afraid of driving a fairly hard bargain, whilst telling them how much you value them.
Very good point. I hadn't considered the fact that you may be able to restart the scheme and still get your higher rate tax discount applied. This would be more 'amicable' than asking the nursery directly for a discount.I was a DFW, now I'm a MFW :T0 -
Hi there folks,
The bitter pill is that a bill from the nursery for £700+ in a salary sacrifice scenario is significantly less due to the Tax and NI benefits. I would never have left the scheme if the accounting from them was done correctly - we just received a basic monthly invoice stating the sessions attended by the kids and the cost of them (which was correct), with an opening amount at the top, less the session costs and a closing amount at the bottom. These figures were never queried by ourselves as session costs were corrctand the deducted figure at the bottom tallied up. We TRUSTED the nursery's accounting dept to process the invoices correctly, if we had taken each monthly statement and compared it to the previous one, we would have noticed the error, but leading busy lives with 3 young kids who attend various activites and working shifts meant we didn't do this ( we just saw the amount at the bottom reducing). I can restart the scheme although the Government have wised up and the scheme I left was more beneficial financially to the new one I would have to enter.
I use an analogy of DD to a service provider (gas/elec/water), and that if they asked me to reduce my monthly DD's due to credit accruing in my account, then 12 months later coming back with 'actually you've used more gas/elec/water than our fiscal metering system was showing and you now owe us £700+, please pay'. I would challenge it and be seriously miffed as the error was their doing and not mine.0 -
This is a bitter pill, and I see that CAB have not responded yet.
I think that if you are looking to know the legal situation, you need to go to your local CAB/ Law Centre and ask ( I know, it's time you can ill afford, for an uncertain outcome)
My gut feeling is that you will get the best response by appealing to the nursery's goodwill. I would write, pointing out the consequential losses & asking what arrangement they can come to.0
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