HMRC CHILD BENEFIT SCHEME WRONGLY CUT 23,000 FAMILIES' PAYMENTS

HM Revenue and Customs' anti-fraud scheme suspended child benefit payments to 23,000 families based on erroneous emigration records, according to a National Audit Office report. The scheme used flight manifests provided by the Home Office to identify parents suspected of having left the country. HMRC suspended payments after receiving data suggesting thousands of claimants had emigrated, but subsequent investigation revealed many had simply taken holidays or never travelled at all. The initial rollout of the scheme was halted following media reporting that exposed the scale of the errors.

The NAO report found that HMRC failed to "adequately consider" the policy's impact on claimants. In the first phase, HMRC did not cross-reference flight records against pay-as-you-earn tax data that would have verified claimants were still resident and working in the UK. The office's investigation determined that HMRC removed these verification checks because it lacked experienced staff to perform them and instead relied on inexperienced workers unqualified to review tax records. Parents received letters demanding responses to 70 questions proving they had not emigrated, despite HMRC already holding records showing them employed and paying tax in Britain.

HMRC has apologised twice for the scheme's operation. The organisation told a House of Commons select committee that 71 per cent of parents targeted by the scheme were actually eligible to receive child benefit. The NAO stated that the first rollout suspended payments for more eligible claimants than necessary and imposed more onerous proof-of-eligibility requirements than the revised scheme subsequently introduced.