FRESH evidence of the bureaucratic chaos in the tax credit system emerged this week when figures released by the National Audit Office showed overpayments now amount to £2.2 billion a year.

Tax credits are the central plank of the Government’s support for lower-paid working families. But as Times Money has revealed, Revenue & Customs has miscalculated the amounts due to parents and then tried to claw them back, often causing hardship.

Our campaigning resulted in the Revenue agreeing not to pursue Elizabeth Barlow, a single mother, for a £2,500 overpayment. At the time, ministers underlined their determination to recoup virtually all overpaid amounts. But this week it emerged that £961 million of overpayments are now considered unrecoverable.

The overpayments are just one example of the chaos within the tax credits system. Parents should be able to claim help with childcare as part of the working tax credit (WTC). This can cover part of the cost of employing a nanny or au pair. However, the experience of another Times Money reader suggests that this help may be hard to secure.

Christina Macwhirter, a journalist from Edinburgh and a separated mother of three children aged between 6 and 11, was delighted when she heard about the Revenue’s Summer 2005 Tax Credits Update, which stated: “We can now help towards the cost of employing nannies or au pairs” through the WTC.

But when Ms Macwhirter made further inquiries, she was told that the scheme applied only in England. She says: “This seems totally unfair. Why should parents in Scotland be put at a disadvantage? When I asked more questions, I was told that I might be able to claim but kept being given contradictory advice.”

A Revenue spokesman says: “This is a complicated area. Each of the four parts of the UK — England, Scotland, Wales and Northern Ireland — has a different body that registers childcare providers. In England, individual au pairs could go through a course under the Childcare Approval Scheme, which would enable the families employing them to claim help with childcare costs under the WTC. But in Scotland it is up to the Scottish Commission for the Regulation of Care (SCRC).”

An SCRC spokesman says: “We do not regulate or register au pairs working in an employer’s home, nor do we register au pair agencies.”

The same applies in Wales and Northern Ireland.

Ms Macwhirter adds: “We have a crazy situation where people in England can benefit from help with the cost of employing au pairs, while those in Scotland, Wales and Northern Ireland cannot. Even in England it appears that there will be obstacles in the path of au pairs, such as having to have a childcare qualification. Very few au pairs possess one. If they have to do a series of courses to obtain one, this would be expensive.”

A recognised childcare course, such as An Introduction to Childminding Practice with the National Extension College, costs £161. The Red Cross Paediatric First Aid Course, another key requirement, costs £88. Registration with the Childcare Approval Scheme, including a criminal record check, costs £96, making a total of £345.

Another problem is that families with children will qualify for help with childcare under the WTC only if their income does not exceed £15,000. Ms Macwhirter says: “This low ceiling will eliminate most families that might have wanted to employ an au pair under the scheme and virtually all families that were considering employing a nanny.”

Significantly the Revenue has no figures on how many families have benefited from the concession for au pairs or nannies.