The UK's tax authority has admitted that the vast majority of parents it targeted in a recent fraud crackdown were innocent, in what a parliamentary committee chair has labelled an 'egregious error'. Her Majesty's Revenue and Customs (HMRC) suspended child benefit payments for thousands of families last year, suspecting they had emigrated and were claiming fraudulently.
A Staggering Error Rate Revealed
Appearing before the Treasury select committee, HMRC chief executive John-Paul Marks revealed that 71% of the 23,700 parents who had their child benefit stopped were targeted in error. This figure is higher than the 63% previously admitted by the department in a written answer before Christmas. Marks conceded that only 'just under 5%' of the suspended accounts have so far been confirmed as fraudulent claims from people living abroad.
The crackdown, launched in July, was intended to save up to £350 million in benefit fraud over five years. It relied on Home Office travel data to identify parents who may have left the UK. However, a critical flaw emerged: HMRC had removed PAYE (Pay As You Earn) record checks that were used in a pilot scheme the previous year. This left the operation dependent on incomplete travel data, which failed to account for common travel patterns, particularly involving Northern Ireland.
'Unnecessary Pain' for Innocent Families
Meg Hillier MP, chair of the committee, accused HMRC of causing significant distress. Parents received letters demanding they answer 73 detailed questions and provide medical records, school reports, and bank statements to prove their eligibility, or face losing vital support. Hillier stated the authority had inflicted unnecessary 'pain' on families, many of whom were left frightened and stressed by the sudden suspension.
A key failure was HMRC's assumption that parents in Northern Ireland had emigrated if they flew out from Belfast but returned via Dublin airport, which is just an hour from the border. 'This seems to me an egregious error from a UK government department,' Hillier told Marks, expressing astonishment that officials had not considered the unique travel circumstances of Northern Ireland.
Flawed Data and Human Cost
The Home Office data used by HMRC was deeply flawed. It included 'no show' records for passengers who had booked flights but not travelled due to reasons like illness or changed plans. Investigations by the Guardian and the Detail website uncovered heartbreaking cases. One mother had her benefit stopped after her child suffered an epileptic seizure at the departure gate, causing the family to miss their flight. Another was flagged after travelling to France to collect her late husband's remains, but the Home Office had no record of her return journey.
Marks told the committee that of the 23,794 cases, 17,048 parents were stripped of benefit incorrectly. While 1,109 accounts (just under 5%) showed 'determined non-compliance', around 5,600 inquiries remain open. He said PAYE checks have now been reinstated and apologised for the error. Looking ahead, Marks estimated that in future operations, between 30% and 50% of those targeted would likely be wrongfully claiming from abroad, a significant improvement on the 71% error rate in this scheme.
