Sorry, it's a long one:
I have been paid in advance to do childcare for an old employer, it suited her as it was already set up and I wasn't too phased about being paid in advance as I can adjust my tax to how much I "earn" each tax year according to my accountant. It was all paid through a voucher company for a set amount each month and I'd 'pay back' in terms of babysitting and childcare as and when needed.
I was told these payments would stop earlier this year, things fluffed up at her end as lots of bad communication skills in her workplace occurred and they'd tell her one thing and another happened, etc, so I ended up being overpaid for three more months (£220 a month, so an extra £660).
On the last month she suggested that I just pay her back the money direct as it was pushing it a bit as it would take beyond a year to use up that much childcare, but I was worried about the legalities of paying her the money (as it had come from her pre-tax income) so said not to worry, I was happy to work it, etc.
I think I'm at a point where I am going to have to pay some of it back though, the amount is a bit silly, assuming she has 4 hours babysitting every 2 weeks (which she doesn't, as most people wouldn't!) it'd take two years for me to 'pay back'. I'd like to offer to pay back some of this money, but I have no idea if this is possible.
The things I'm worried about:
- I was paid through a voucher company, who took money from her pre-tax income, so if I pay the money direct to ex-employer, I am essentially helping her avoid tax, even though it's minimal. I categorically do not want to look like I'm helping somebody with tax evasion.
- It may be flagged on my tax returns and if they don't accept the explanation I would have to pay tax on it, which leaves me out of pocket.
I could solve number 1 if I could pay it back to the voucher company, who I will attempt to speak to on Monday to see if this is possible. Then her money is in the voucher company and can be used elsewhere for future childcare. This should also sort out number 2 as it would be a proper refund.
However, the voucher company are a right PITFA to deal with and they refused to speak to me the last time I tried to talk to them (after the second overpayment). So what do I do if they do the same again? Can I just pay the money back directly to my ex-employer or will that be dodgy?