HMRC's suspension of child benefit payments 'cavalier' - MPs

The UK tax office took a "cavalier" approach to child benefit checks when it decided to strip payments from thousands of claimants after wrongly assuming they had permanently relocated out of the UK, a group of MPs have said.

Payments stopped when HM Revenue & Customs (HMRC) ceased cross-checking travel records with claimants' tax data to prove they were in the UK.

Treasury Select Committee chair Dame Meg Hillier said it had made a "costly error" by dropping key assessments.

HMRC boss John-Paul Marks apologised and said several changes had been made to improve the process including reinstating employment checks.

Writing to the Treasury Select Committee, Mr Marks said by the end of October, about 15% or more than 3,600 of the 23,794 claimants who were flagged as potentially ineligible due to their travel history, were confirmed to still qualify for child benefit.

In September, HMRC began a crackdown on child benefit fraud which it believes could save £350m over the next five years.

Child benefit is paid to 6.9m families but runs out after eight weeks living outside the UK.

Many people affected complained HMRC had stopped their money after they went on holiday for just a short time. In some cases benefits were stopped because the tax office had evidence of a claimant leaving the UK, but not returning.

The HMRC's pilot programme used Home Office data on passengers departing the UK, as well as other tax payments such as PAYE to identify whether a claimant had arrived back in the UK.

Mr Marks said the additional cross-checks against UK tax and payroll data were dropped after the pilot was extended, in order to "streamline the process".

Dame Meg said: "HMRC is absolutely right to look at innovative ways to fight fraud and error in our system.

"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."

Mr Marks said he apologised to thousands of claimants who stopped receiving funds because of this "streamlining".

The HMRC chief executive also outlined plans to give claimants at least one month to provide proof they are eligible for the benefit if travel data suggests they are no longer in the UK, and payments will not be paused at the start of an investigation.

Welcoming the apology, Dame Meg warned MPs would question HMRC in the new year about "the lessons they have learned from this mistake".