HM Revenue and Customs (HMRC) has been forced to make a significant U-turn after a controversial crackdown on Child Benefit payments mistakenly stripped more than 20,000 UK parents of their entitlements. The error, which has been labelled "egregious" and "appalling" by senior MPs, particularly affected hundreds of families in Northern Ireland who had travelled via Dublin Airport.
A Crackdown with Catastrophic Errors
The pilot scheme, authorised by the Labour government, was designed to clamp down on individuals who had emigrated from the UK but were still claiming the benefit. However, data presented to the Treasury Select Committee on Tuesday revealed a staggering failure rate. Of the 23,794 accounts initially suspended, a shocking 17,048 were mistakenly targeted – an error rate of 71 per cent.
Meg Hillier MP, Chair of the Treasury Committee, expressed her dismay at the scale of the blunder. She was especially critical of HMRC's failure to account for the unique circumstances of Northern Ireland within the Common Travel Area (CTA). "(HMRC) is supposed to be one of the government departments that covers the entire UK... so why didn't anybody pick up on the Common Travel Area issues?" Hillier questioned, adding that the oversight represented an "egregious error from a UK government department."
Minimal Fraud Uncovered in Botched Pilot
The committee heard that the aggressive enforcement action yielded minimal results in terms of actual fraud detection. To date, only 1,109 of the suspended accounts have been confirmed as fraudulent, representing less than five per cent of the total cases reviewed. A further 5,600 cases remain under investigation by the tax authority.
In response to the criticism, HMRC Chief Executive John-Paul Marks outlined the corrective steps taken. "We've reinstated the PAYE check... then we've reinstated the payments and backdated them all so the customer is not worse off, and we've apologised," Marks told MPs. He confirmed that the "upfront checks" which triggered the suspensions have now been withdrawn.
HMRC Defends Use of Travel Data Despite Setback
Despite the high-profile failure, HMRC has defended its overall approach to using international travel data to combat error and fraud. In a statement, the department estimated that £270 million of Child Benefit payments were incorrectly claimed in the 2024/25 financial year, citing unreported changes in residency as a primary cause.
"The pilot remains our best assessment of how using international travel data effectively can help tackle error and fraud," an HMRC spokesperson said. "This approach means we contact less than 2% of Child Benefit customers rather than asking all recipients to regularly confirm they remain eligible."
Meg Hillier concluded the session by demanding assurances that HMRC now fully understands the complexities of the Common Travel Area, urging officials to ensure "something this embarrassing doesn't happen" again. The episode has raised serious questions about the implementation of data-driven compliance checks and their impact on innocent families.
