HMRC bosses have been accused of being “cavalier” with people’s finances after stripping child benefit from nearly 4,000 parents who were wrongly assumed to have emigrated.
Senior officials are going to be summoned before the Treasury select committee to explain why the benefit fraud crackdown went so awry.
“HMRC is absolutely right to look at innovative ways to fight fraud and error in our system,” said Dame Meg Hillier, the chair of the influential parliamentary committee. “I’m afraid, though, that it appears they have been cavalier with people’s finances, making the arbitrary decision to remove necessary checks and causing a mess they are now forced to clean up.”
She added that a decision by HMRC not to cross-check faulty travel data it had received from the Home Office against tax records was a “costly error”.
In a letter to the committee yesterday, HMRC chief executive John-Paul Marks revealed that, up to 31 October, 3,673 out of 23,795 parents wrongly suspected of emigration had their eligibility to continue receiving child benefit “confirmed”.
The debacle unfolded after HMRC took Home Office travel data including airline, ferry and Eurotunnel bookings that purported to show just under 24,000 people had left the country and not come back.
An investigation by the Guardian and investigative website The Detail found last month that at least 2,000 of the parents who had their benefits stopped had simply gone on holidays or work trips, and their return journeys were not recorded by the Home Office.
Among those accused of having emigrated was a woman who could not go on holiday because one of her children had an epileptic seizure at the departure gate – and another who cancelled a trip to Norway after a wedding was called off.
A Ukrainian national called Tetiana, who fled the war in 2022, was accused of returning to the country, even though records showed she was a full-time carer to her paraplegic brother in the UK.
Other incidents include a woman who was unable to make it to the airport after she was overcome with sepsis, which left her in hospital for eight weeks.
In at least two cases, child benefit was stopped in relation to trips taken before a pregnancy. Some were affected over apparent one-way journeys they had taken years ago.
HMRC launched the crackdown in August after a pilot scheme last year, but flaws in its approach only emerged after last month’s investigation.
Marks, HMRC’s first permanent secretary, wrote to the Treasury committee after it demanded answers to 14 questions – and acknowledged “the decision to use Home Office data … has impacted our service to some customers”.
He said HMRC has “taken swift action to resolve the position for affected customers”, and “strengthened the process and safeguards going forward”. Parents are also being given “a further four weeks” to come back and prove they were in the UK, putting the onus on taxpayers.
HMRC explained it had “excluded” pay as you earn data “in order to streamline the process”, adding that PAYE checks would form “part of any subsequent customer enquiry” – in other words, after a complaint.
Hillier said: “I understand they must try to remove any unnecessary bureaucracy within their processes but this is a costly error. It is right that they have apologised. When they next appear in front of our committee, in the new year, we will certainly be pressing them on the lessons they have learned from this mistake.”
Parents said they felt like “criminals” after receiving letters from HMRC demanding answers to more than 70 questions – as well as private medical records and bank statements to prove they were not fraudsters. Many feared the letters were “a scam”.
