The UK’s public spending watchdog has launched an investigation into a controversial government anti-fraud scheme which resulted in thousands of families being unfairly stripped of their child benefit payments.
The National Audit Office (NAO) will examine how HM Revenue and Customs designed and implemented a scheme that used faulty Home Office travel records to identify parents suspected of living abroad while claiming child benefit.
The investigation follows a series of articles in Detail and The Guardian which exposed how HMRC relied on faulty travel data that recorded outbound journeys, including airline bookings that were never used, and often failed to record return journeys by tourists and business travellers.
HMRC took the data in good faith from the Home Office and ended up incorrectly suggesting that families had emigrated and were fraudulently claiming overseas support.
Among those who had not even flown abroad but were stripped of child benefit was a woman who did not board the plane after her son suffered an epileptic seizure at the gate, and another woman who did not travel to Norway after the wedding she planned to attend was cancelled.
Some people in Northern Ireland had their benefits withdrawn after returning via Dublin Airport, while others simply had their child benefit frozen because the Home Office had no record of their return to the UK – an issue that neither the Home Office nor HMRC have fully explained.
HMRC suspended payments to 23,794 families between July and October last year in an anti-fraud campaign. Parents received letters referring to past holidays, sometimes from three years ago, for which the Home Office had no record of return trips.
More than 17,000 of those families were determined to be legitimate claimants as of December 31, while 1,019 (4.3%) were filing incorrect claims. The number of legitimate claimants is expected to increase and thousands of cases remain unresolved.
The NAO investigation will examine the strategy, governance and implementation of the intervention, and how HMRC managed risks when implementing the data-driven system.
Conservative Party aide Andrew Snowden, who last year called for a public inquiry and spoke of his own family’s experience with the benefits system, welcomed the NAO investigation.
“From the beginning, there has been a worrying lack of transparency from the government about how this policy was designed, what data it was based on and how thousands of families’ payments were wrongly suspended,” the MP said.
“Parliament has had to rely on written questions and piecemeal disclosures to understand the scale of the problem.
“It is important for public confidence that we find out who knew what, when and how they will ensure this type of error does not happen again.”
Internal documents, obtained by the news site Detail, show that officials considered the data-sharing plan a success even as thousands of payments were mistakenly suspended and most families were later found to be eligible.
Despite issuing a series of apologies, HMRC officials maintained that the data sharing agreement with the Home Office was working as expected.
“Although HMRC has acknowledged some issues in compliance investigation processes, the data sharing aspects of the exercise remain consistent with what is expected and agreed,” said an internal report sent to the Cabinet Office in mid-November 2025.
“Data sharing between HMRC and the Home Office continues to work as expected and agreed, and we still expect the investigation process to find that around 64% of cases are ineligible (for child benefit),” he said.
By the end of November, the opposite was true: figures published by HMRC showed that at least 63% of cases were legitimate claims for child benefit, a figure which rose to 71% by the end of December.
HMRC has not published updated figures since then.
The internal report justified suspending child benefits before any fraud was proven, a policy which HMRC has now abandoned.
In a letter to the Treasury select committee, John-Paul Marks, first permanent secretary and chief executive of HMRC, said he had met with the comptroller and auditor general of the NAO to discuss a “revised approach”.
The emphasis appears to be on supporting taxpayers who are questioned by HMRC without reference to flaws in the Home Office data, the cause of the errors.
“We are taking a careful and controlled approach with strong organizational listening so that we can support customers throughout the journey and understand any issues quickly,” Marks wrote in the letter. “This includes ensuring our client’s process is end-to-end before increasing volumes.
“A monitoring group will closely monitor the progress of the activity using international travel data and iterate processes where our monitoring and learning suggest we need to make further changes.”
He said he would update the committee on progress in the summer, taking into account the findings of the NAO review.
