The National Audit Office (NAO) has found that HM Revenue and Customs (HMRC) failed to adequately consider the impact of an anti-fraud crackdown that wrongly suspended child benefit payments for 23,000 families. The scheme, which relied on flight records from the Home Office, erroneously flagged parents as having emigrated when many had only taken holidays or not traveled at all.
HMRC apologises after 71% of targeted parents were eligible
HMRC has apologised and admitted that 71% of parents targeted were in fact eligible for the benefit. The NAO report followed HMRC's suspension of payments after the Guardian and Belfast investigative website The Detail exposed that thousands of parents had simply gone on holiday, but the Home Office had no record of their return to the UK. One parent was booked to attend a wedding in Norway that was cancelled, so they did not travel; another was recorded as having emigrated to Italy, but her family did not board the plane because a child suffered a seizure at the departure gate.
Initial pilot included PAYE checks, but rollout omitted them
In an initial pilot, HMRC cross-checked flight manifests with pay-as-you-earn (PAYE) data to filter out UK residents. However, when the scheme was first launched, those PAYE checks were not included. The NAO said the first rollout did not adequately consider the impact on claimants, suspending payments for more eligible claimants than necessary and imposing onerous requirements to prove eligibility. The removal of PAYE checks was due to a lack of experienced staff; inexperienced workers who were not qualified to check tax records handled the process.
Parents faced stressful 70-question letters
Parents first learned their benefits were suspended when they received letters demanding they answer 70 questions to prove they had not emigrated, despite HMRC holding records of them working and paying tax in the UK. The NAO noted that some operational changes did not adequately consider the impact on claimants. HMRC told the NAO it relied on feedback via phone calls, letters, and MP representations to identify problems, and has since reinstated PAYE checks. It also corrected errors for travellers from Northern Ireland who returned via Dublin airport, as the Home Office had no record of their return.
One parent described experience as 'stressful and upsetting'
Agnieszka, a Polish-British dual national working in financial services, said her payments stopped after a week's holiday in 2023. She flew to Warsaw and returned via Edinburgh, but the Home Office had no record of her return. "The letter came as a huge shock for me and I have found the whole experience very stressful and upsetting. I have tried to speak to HMRC, but it is like hitting a wall," she said. HMRC received 22,500 calls from customers between August 2025 and February 2026, reflecting the scale of the blunder.
NAO urges HMRC to consider human cost of innovative fraud schemes
The NAO report said HMRC should consider the human cost of what it acknowledged was an "innovative" scheme to crack down on fraud. It stated that arrangements should ensure innovation to tackle fraud and error while minimising impacts and potential hardship for eligible claimants. HMRC acknowledged weaknesses in oversight, including not appointing a single senior responsible owner for the scheme, leaving key decisions without sufficient scrutiny.
HMRC defends scheme, says it protected £60 million
An HMRC spokesperson said cases opened between August and October 2025 had protected around £60 million in taxpayers' money, and that about £270 million was incorrectly claimed in 2024-25 by people living overseas. "We welcome this report, which recognises how data can help tackle child benefit error and fraud. We've acknowledged that some mistakes were made initially, but we took swift action to put things right and strengthened our approach with extra safeguards," they said. "Our work so far has prevented thousands of customers claiming incorrectly, protecting tens of millions of pounds of taxpayers' money."
