The National Audit Office has strongly criticised HM Revenue and Customs for a child benefit crackdown that stripped 23,500 families of their payments, failing to adequately consider the impact on claimants. The NAO report, published today, highlights serious flaws in the anti-fraud initiative launched under the Labour government in September 2025.
NAO Report Highlights Flaws in HMRC's Approach
The NAO stated: "The first rollout did not adequately consider the impact on claimants, suspending payments for more eligible claimants than it needed to, combined with more onerous requirements for many of them to prove their eligibility." The scheme, which compares HMRC records with Home Office international travel data, was intended to save £350 million over five years by detecting fraud.
However, thousands of families who had taken short holidays abroad saw their benefits suspended incorrectly. HMRC has since reviewed all cases after a surge in complaints from affected claimants who said they had returned to the UK within a short period.
Operational Changes and Oversight Weaknesses
The NAO noted that "some operational changes to the intervention did not adequately consider the impact on claimants." HMRC admitted it relied on feedback via phone calls, letters, and MP representations to identify problems, and has since reintroduced PAYE checks. The report also revealed that HMRC "did not appoint a single senior responsible owner" for the scheme, leaving key decisions without sufficient scrutiny.
HMRC acknowledged to the NAO there were "weaknesses" in its oversight. The tax authority said: "Its arrangements should ensure there is consideration of using innovation to tackle fraud and error, while also minimising impacts and potential hardship for eligible claimants."
HMRC Defends Savings and Swift Action
A spokesperson for HMRC defended the initiative, stating that cases opened between August and October 2025 had "protected around £60m in taxpayers' money." They added: "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. Our work so far has prevented thousands of customers claiming incorrectly, protecting tens of millions of pounds of taxpayers' money."
