Taxman out to catch the middle class family nanny In January Dave Hartnett, the Permanent Secretary for Tax at HMRC told The Daily Telegraph that people who pay cash in hand to tradesmen were "diddling" the economy and diverting money from hospitals and schools. On Friday HMRC sources say extra money has been handed to tax officials from the Treasury to "tackle evasion, avoidance and fraud across the board." "Part of that will go to employer compliance, making sure the PAYE rules are adhered to but it's a normal part of our work," one source told The Daily Telegraph. Most employers of nannies play by the rules, part of our normal work (is) to make sure that those who don't are brought to book. If an employer is not operating PAYE they are cheating UK PLC but they are also cheating their employee of out of their future pension entitlements. They added: "The small number of employers who don't operate PAYE and hand over National Insurance are burgling the future of their member of staff, possibly leaving them in penury later on." According to tax rules, employers have a legal obligation to operate PAYE on the payments to employees if their earnings reach the National Insurance Lower Earnings Limit (LEL). For the current tax year this is £107 a week, £464 a month or £5,564 a year. It comes as evidence uncovered by the Financial Times suggests many working parents attempt to cut childcare costs topping up legal payments with cash, while other families "nanny share" or give free accommodation to an au pair. It is thought there are more than 30,000 nannies working in England alone. Figures suggest tax evasion costs the Treasury about £57m a year amid claims up to a fifth of nannies worked without tax or national insurance payments. Childcare professionals say the actual cost to the government is much higher due to the industry's unregulated rules. "A lot of people are doing the right thing and that means being hard on the black or grey markets," said Liz Truss, a Tory MP who hired a nanny - and paid the taxes - for her two young daughters. These nannies are competing with childminders who are paying tax and jumping through hoops. Research suggests more than a third of parents with a net household income above £50,000 admit to struggling to fund childcare costs. "We have got cases of mums ... saying there is no point in working because of childcare costs," Justine Roberts, chief executive of Mumsnet, the mother's group, told the newspaper. If you live in London and have a nanny, then you do have to earn a pretty big wage. Someone told me that earning £48,000 she has nothing left. On Friday night, an HMRC spokesman said: "We expect to catch more parents who are avoiding PAYE [tax] in the next year. It's not particularly hard to find them. When a nanny leaves and starts a new job, it often becomes clear that previous payments have not been made. We have made a lot of help available and there are many payroll providers in the nanny tax market, making it easy to comply with the rules. He added: "Employers have clear legal obligations and where these are not complied with we take action." Ministers have sought to improve provision by funding more childcare places, increasing spending by up £760m last year to ensure that the poorest 40 per cent of children get 15 hours" free childcare a week from 2013.