HMRC Child Benefit Anti-Fraud Scheme: NAO Report Finds Scheme Did Not Adequately Consider Claimant Impact

What Happened: The HMRC Anti-Fraud Child Benefit Scheme

Between July and October 2025, HMRC ran a data-driven compliance scheme designed to identify child benefit claimants who may have moved abroad while continuing to claim. The scheme relied on international travel records supplied by the Home Office, which HMRC accepted at face value.

The problem was that those records were fundamentally flawed. They recorded outbound journeys - including flight bookings that were never used - but frequently failed to capture return journeys. The result was that HMRC mistakenly concluded thousands of families had emigrated when they had not.

Among those caught by the scheme were:

• A family whose child had an epileptic seizure at the departure gate and never boarded the flight
• Families in Northern Ireland whose return via Dublin airport was not recorded
• People who made business trip bookings and cancelled without updating departure records
• Claimants whose child benefit was stopped based on holidays taken up to three years earlier for which no return journey could be verified

Scale of the Error: What the Data Shows

The numbers tell a stark story. Of the 23,794 families whose child benefit was suspended, HMRC's own original projection was that around 64% would be found ineligible. The reality was the exact opposite: by the end of November 2025, 63% of completed cases were legitimate claimants, rising to 71% by December 2025.

HMRC has not released updated figures since December 2025. Thousands of cases remain unresolved as of the NAO report date.

What the NAO Investigation Found

The National Audit Office investigated the strategy, governance and implementation of the scheme, examining how HMRC managed the risks of deploying a data-driven compliance system at scale.

The NAO's central finding was that the first rollout did not adequately consider the impact on claimants, suspending payments for more eligible families than necessary and imposing onerous requirements on those families to prove their eligibility.

Specific failures identified include:

• The Home Office travel data recorded outbound journeys but not always return journeys, creating a systematically biased picture
• HMRC did not cross-check addresses against its own PAYE records before contacting families - a step that would have filtered out many false positives
• Internal reports submitted to the Cabinet Office as late as November 2025 described the data-sharing arrangement as working as planned, even as evidence of mass errors was accumulating
• Advice organisations were given little warning. A single Microsoft Teams meeting in January 2025 with no minutes or transcript was the only prior engagement
• The response window of one month was flagged by advisers as too short given that HMRC letters can take weeks to arrive

What HMRC Has Changed

Following the scale of errors becoming public, HMRC made a series of changes to how the scheme operates:

• Payments will no longer be suspended before fraud is established
• PAYE records will now be checked before families are contacted
• Families will be given longer to respond
• Letters will use a more supportive tone and clearly explain why additional information is needed
• Claimants will be asked to confirm whether they actually travelled, given that some flagged individuals had never taken the flights recorded in Home Office data

John-Paul Marks, Chief Executive of HMRC, confirmed a revised approach to the Treasury Select Committee and met with the NAO's Comptroller and Auditor General to discuss next steps. HMRC is relaunching the scheme under increased governance arrangements and with the stated intention of learning from the first rollout.

If You Were Affected: What to Do

If your child benefit was suspended as part of this scheme and you believe the decision was wrong, HMRC has confirmed it is working through unresolved cases. Steps you can take:

• Contact HMRC's child benefit helpline on 0300 200 3100 and reference the compliance review of international travel data
• Gather evidence of your presence in the UK during the relevant period - bank statements, payslips, GP or school records, utility bills
• If HMRC has confirmed you were eligible but payments have not been reinstated, request a formal decision in writing
• If you are dissatisfied with HMRC's response after following the complaints process, you can escalate to the Adjudicator's Office or the Parliamentary and Health Service Ombudsman via your MP

What is the HMRC child benefit anti-fraud scheme?

The scheme used international travel data from the Home Office to identify child benefit claimants suspected of living abroad while still claiming. It ran between July and October 2025, suspending payments for 23,794 families.

Why were so many legitimate claimants caught by the scheme?

The Home Office travel data recorded outbound journeys but frequently failed to capture return journeys. It also included flight bookings that were never used. HMRC accepted this data without cross-checking against its own PAYE records, leading to widespread false positives.

Has HMRC reinstated payments for affected families?

HMRC confirmed that over 17,000 of the suspended cases were legitimate claimants as of 31 December 2025. Payments should have been reinstated in those cases. If yours has not been, contact the child benefit helpline on 0300 200 3100.

Will the scheme run again?

Yes. HMRC has announced it will relaunch the scheme with new safeguards: checking PAYE records before contacting families, no suspension before fraud is proven, and improved governance. The NAO has recommended HMRC apply lessons from the first rollout to other data-driven compliance interventions.

What is the NAO's role?

The National Audit Office is the UK's public spending watchdog. It examines whether public money has been spent efficiently and effectively, and reports to Parliament. Its investigation into the HMRC child benefit scheme is an independent review, not a regulatory enforcement action.