Jewish charities providing care to vulnerable people with learning disabilities have warned of potentially “catastrophic” effects, after the taxman called for six years’ back-pay amounting to millions of pounds.

The issue concerns overnight wages paid to sleep-in staff, traditionally paid fixed sums of £25 or £35 for the time they slept. Two tribunals late last year ruled however that these staff should have been paid the minimum wage throughout their sleep-in period, in a series of judgements that stunned charities across the UK.

Despite the sector’s subsequent lobbying, tax inspectors from HM Revenue and Customs have already been investigating and claiming six years’ back-pay, in some cases amounting to millions of pounds.

This week two Jewish charities – Norwood and Kisharon – said the back-pay claims, if pursued by the government, would be catastrophic, and could affect the care provided by the community to its neediest members.

“This is a black cloud hanging over all learning disability providers since the initial rulings and subsequent appeal,” said Norwood chairman David Ereira.

“The impact of issuing back-pay claims to sleep-in staff over a six-year period would be catastrophic, amounting to an additional cost of nearly £1.7m which would eat into our already very pressured and reduced reserves.”

He said the charity would “do everything we can” to maintain care provision, but added: “This ruling would force us to review the level of support we could afford to offer in the future, as we would be completely dependent on Local Authorities funding this additional cost going forward. In our view it is extremely unlikely that local authorities could make this available.”

Norwood has been lobbying within the consortium of the Voluntary Organisations Disability Group to pressure the government to find a solution that would prevent what Ereira said would be “a possibly fatal blow to the sector”.

He was joined in his concern this week by Beverley Jacobson, chief executive of Kisharon, who said her charity would be extremely hard hit by the ruling.

“This is a very serious issue and will have enormous ramifications for the industry,” she said. “Kisharon will be hugely affected by this, as we continue the rapid growth of our supported-living service in-line with the huge demand.”

Jacobson said Kisharon was in a slightly better position than others because its service was “still in its relative infancy,” with the charity supporting 26 people for the last two years, but echoed Ereira in warning that it could have a “catastrophic” effect on future care.

“Going forward, we will either have to demand that commissioners pick up this cost or will have to be very creative about how we provide the required support,” she said.

“One idea may be to provide free accommodation to adequately trained students of staff in exchange for their effectively performing the role of the overnight staff.

“One thing is for sure, we cannot take any risks by removing this support which is so necessary for many within this vulnerable population group and I only hope that this view is consistent throughout the industry otherwise the consequences could be catastrophic.”