Inquiry launched into HMRC anti-fraud scheme that wrongly cut child benefits
The UK’s public spending watchdog has launched an investigation into a controversial government anti-fraud scheme that resulted in thousands of families being wrongly stripped of their child benefit payments,The National Audit Office (NAO) will examine how HM Revenue and Customs designed and implemented a scheme that used flawed Home Office travel records to identify parents suspected of living abroad while still claiming child benefit,The inquiry follows a series of articles in the Detail and the Guardian which exposed how HMRC relied on faulty travel data which recorded outgoing journeys, including airline bookings that were never used, and frequently failed to record return journeys by holidaymakers and business travellers,HMRC took the data in good faith from the Home Office and ended up incorrectly suggesting that families had emigrated and were fraudulently claiming the support from abroad,Among those who hadn’t even flown abroad but were stripped of child benefit was a woman who did not board the plane after her child had an epileptic seizure at the departure gate, and another woman who did not travel to Norway after the wedding she was planning to attend was cancelled.
Some people in Northern Ireland had their benefits stripped after returning via Dublin airport, while others simply had their child benefit frozen because the Home Office had no record of their return to the UK, an issue that neither the Home Office nor HMRC have fully explained.HMRC suspended payments for 23,794 families between July and October last year in an anti-fraud crackdown.Parents received letters referring to past holidays, sometimes as far back as three years ago, for which the Home Office had no record of return journeys.More than 17,000 of those families were found to be legitimate claimants, as of 31 December, while 1,019 (4.3%) were claiming incorrectly.
The number of legitimate claimants is expected to rise, with thousands of cases still unresolved.The NAO investigation will examine the strategy, governance and implementation of the intervention, and how HMRC managed risks in deploying the data-driven system.Andrew Snowden, the Conservative party’s assistant whip, who last year called for a public inquiry and spoke of his own family’s experience with the benefits system, welcomed the NAO investigation.“From the outset, there has been a troubling lack of transparency from the government about how this policy was designed, what data was relied upon, and how thousands of families came to have their payments suspended in error,” the MP said.“Parliament has had to rely on written questions and piecemeal disclosures to understand the scale of the problem.
“It is important for public confidence that we find out who knew what, when, and how they will make sure that this kind of mistake doesn’t happen again.”Internal documents, obtained by the Detail news site, show officials regarded the data-sharing scheme as a success even as thousands of payments were wrongly suspended and most families were later found to be eligible.Despite having issued a number of apologies, HMRC officials maintained that the data-sharing arrangement with the Home Office was working as expected.“Although HMRC has acknowledged some issues in the compliance inquiry processes, the data share aspects of the exercise remain consistent with what was expected and agreed,” stated an internal report sent to the Cabinet Office in mid-November 2025.“The exchange of data between HMRC and the Home Office continues to work as expected and agreed, and we still expect that the inquiry process will find about 64% of cases ineligible [for child benefit],” it said.
By the end of November, the opposite was true, with figures released by HMRC showing at least 63% of cases were found to be legitimate claims of child benefit, rising to 71% by the end of December.HMRC has not released any updated figures since.The internal report justified suspending child benefits before any fraud was proven, a policy HMRC has now abandoned.In a letter to the Treasury select committee, John-Paul Marks, the first permanent secretary and chief executive of HMRC, said he had met the NAO’s comptroller and auditor general to discuss a “revised approach”.The emphasis appears to be focused on supporting taxpayers who are challenged by HMRC with no reference to flaws in Home Office data, the cause of the mistakes.
“[W]e are adopting a careful and controlled approach with strong organisational listening so we can support customers through the journey and understand any issues quickly,” Marks wrote in the letter.“This includes undertaking assurance on our end-to-end customer process before scaling up volumes.“An oversight group will closely monitor the progress of the activity utilising international travel data and will iterate processes where our monitoring and learning suggests that we should make further changes.”He said he would update the committee on progress in the summer, taking into account the findings of the NAO review.
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