HMRC is reviewing decisions to strip child benefit payments from 23,500 people after using individuals’ travel data to conclude that they had emigrated from the UK.
The benefit is normally stopped if someone spends more than eight weeks living outside the UK, but many of the people affected complained the tax body stopped their payments after they went abroad for a holiday.
It comes after the government began a new crackdown on child benefit fraud as part of an attempt to save £350m over the next five years.
The system, which was being piloted, allows HMRC to use Home Office international travel data to assess whether people are still living in the UK.
But all the affected cases are now being reviewed after a growing number of complaints from people who briefly left the UK and returned to find their payments had been stopped.
The problem was first identified in Northern Ireland after some families had flown out of the UK from Belfast and then returned to Dublin, in the EU, before driving home over the border.
According to the Guardian, almost half of the families initially flagged as having emigrated were still living in the UK.
The newspaper reported that the scheme saved HMRC £17m but left 46 per cent of the families targeted incorrectly suspected of fraud.
In Northern Ireland, 78 per cent were incorrectly identified as not having returned from trips abroad. Some 129 families were flagged during the pilot as having left the country when only 28 had actually done so.
HMRC told The Guardian it will no longer use data on travel through Dublin airport to assess fraud because it is part of the common travel area, and will not stop benefits before cross-checking with the person concerned and looking at PAYE records.
The decision to review the system comes after MPs on the Treasury Select Committee demanded answers from the tax authority.
A spokesperson for HMRC said: “We’re very sorry to those whose payments have been suspended incorrectly. We have taken immediate action to update the process, giving customers one month to respond before payments are suspended.
“We remain committed to protecting taxpayers’ money and are confident that the majority of suspensions are accurate.”
