Childcare Service said no — evidence, review, and what you might repay

Most families fear a bill for a year of 30 hours. That is not how funded hours work. The pot HMRC can assess is the Tax-Free Childcare top-up. Hours already running may continue for a short grace window, then they stop.

This page is for after something has already broken: a missed login, a refused reconfirm, an evidence request, or a letter that says you were not eligible.

Tax-Free Childcare

If they decide you should not have had the 20% top-up, they can assess that top-up. That is still money you may have to repay. It is the top-up, not your nursery fees.

Source: HMRC Freedom of Information response, 2024/25 — 290 Tax-Free Childcare top-up assessments totalling about £500,000 (average in the low thousands).

Working-parent funded hours

Paid by the local authority to the nursery. When you fall out of eligibility the place can run to a grace-end date, then the hours stop. There is no standard parent invoice for 1,140 hours.

Separate from that, HMRC can add a civil penalty if a Tax-Free Childcare declaration was careless or deliberate: usually £125 per three-month period if careless, £250 if deliberate. A dishonesty penalty can go to £3,000 or the top-up obtained, whichever is higher.

What happened — pick the row

What happened	Do this next
Missed the 90-day login	Sign in now. If the window has closed, TFC is pay-only. Ask the nursery to check grace-end.
Refused on the £100,000 cap	If the full year will land under, use the 14-day evidence form. If After is still over, do not send a pack that claims you are under.
Refused on the 16-hour floor	Evidence is payslips, invoices or an accountant letter — not a dividend voucher.
Partner / Gateway problem	Helpline first. Do not burn the 30-day review on a login error.
Nursery deadline missed / code never validated	That term’s hours are usually gone. Send the code today if they never checked ECS.
You stopped declaring under	Right call. Use grace on any place already running.

30-day mandatory review

A review is only for a decision you disagree with. Send it no later than 30 days after the date on the decision. Official form: Challenge a Childcare Service application decision.

The review does not freeze a failed code. Phone the nursery the same day so they validate grace on ECS.

Keep hours running while you argue

Funded hours run only to the grace-end date on a place already running. The full table sits on the 90-day job. Tax-Free Childcare has no grace period.

After you win late

A successful review does not rewind the term. Compensation exists only in narrow official cases — not because year-to-date pay looked high or you missed the login.

FAQs

Will HMRC invoice me for a year of 30 hours?

No. Hours are paid to the nursery and stop at the grace-end date. What HMRC can assess is the Tax-Free Childcare top-up.

What is the maximum penalty on top of that?

Usually £125 careless or £250 deliberate per three-month period. Dishonesty can go to £3,000 or the top-up obtained. That sits on top of any top-up you repay.

Does a review keep the hours on?

No. A review does not freeze the code.