HM Revenue and Customs (HMRC) has been accused of making an "egregious error" after it was revealed that the vast majority of families targeted in a recent child benefit fraud crackdown were in fact entitled to the payments.
Shocking Scale of Mistargeting Revealed
Figures disclosed in Parliament this week show that 71 per cent of claimants who had their child benefit suspended during the pilot scheme last year were legitimate. The initiative, launched under the current Labour government, aimed to identify fraudulent claims but has instead caused widespread distress among innocent families.
HMRC's chief executive, John-Paul Marks, admitted to MPs that only "just under 5%" of the 23,700 parents affected were found to be fraudulent. This means that over 16,800 families had their vital financial support wrongly interrupted.
A Flawed and 'Cavalier' Process
Meg Hillier MP, chair of the Public Accounts Committee, branded the approach "egregious" and accused the tax authority of being "cavalier with people’s finances". She stated the error had caused unnecessary "pain" and created a "mess" that officials are now forced to clean up.
In his explanation, Mr Marks revealed a critical flaw in the process. While an initial pilot used Pay As You Earn (PAYE) data to check if families were still in the UK and economically active, this crucial check was removed when the scheme was expanded in a bid to "streamline" operations.
"In expanding the process over the past few months, a check of HMRC PAYE systems to look for continuing UK employment was excluded," Marks said, adding that reinstating it would have been "disproportionately operationally intensive".
Apologies and Promises of Scrutiny
HMRC has issued an apology for the error. "We’ve apologised for making that error," John-Paul Marks told the committee.
While Meg Hillier acknowledged that HMRC is "right to look at innovative ways to fight fraud," she condemned the execution. "I understand they must try to remove any unnecessary bureaucracy within their processes but this is a costly error," she said.
The committee has vowed to pursue the matter further, stating that when HMRC officials appear before them again in the new year, they will be pressed on the lessons learned from this significant mistake.
