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View image in fullscreen The scale of HMRC’s anti-fraud fiasco is four times higher than known previously, with at least 15,000 of the 23,000 targeted claimants actually being legitimate. Photo by Kate Bezzubets on Unsplash
Over sixty per cent of parents who had their child benefit stopped by HMRC in a controversial anti-fraud crackdown were legitimate claimants, it has emerged.
UK tax authorities have been criticised for relying on faulty Home Office travel data which incorrectly suggested that families had emigrated and were fraudulently claiming the support from abroad.
Almost 15,000 of the over 23,700 parents targeted by HMRC are now identified as legitimate beneficiaries living in the UK. The scale of the error is four times higher than previously admitted.
That number is likely to increase, as 7,781 cases remain open. So far only 1,019, or 4.3%, have been found to be fraudulent.
The new figures were revealed in a written answer to a parliamentary question tabled by Conservative MP for Fylde, Andrew Snowden.
“These figures are deeply troubling,” he told The Detail.
“HMRC has confirmed that nearly two-thirds of the families caught up in this exercise were fully eligible for child benefit, meaning only 4.3% were found to be claiming incorrectly.
“I grew up in a family that for a period of time, through no fault of our own, relied on the benefits system for a period of time. So I know first-hand how distressing it will have been for those who will rely on that money to put food on the table.
“The important thing here is that these families, who have every right to the benefit, have had it removed from them through no fault of their own,” he said.
He said the errors have “badly undermined” the public’s trust in reform of the benefits system and that a full independent inquiry was needed.
The error rate in the wider roll out of the scheme (63%) is significantly higher than during the pilot (46%), which used a smaller sample.
Labour MP Dan Tomlinson, exchequer secretary to the Treasury, said that the data “is not comparable with the pilot.”
“Recognising the issues with the implementation of the expansion, HMRC put in place an expedited process for customers that varied from the way it applied checks in the pilot.”
Mr Tomlinson said that as of 30 November, 14,994 of the 23,794 cases where benefit had been suspended had since “been confirmed to be eligible to child benefit”.
This is quadruple the number previously admitted by HMRC which has repeatedly said it would not be entering a “running commentary” on the fiasco.
A letter from HMRC’s permanent secretary to the Westminster treasury select committee last month only disclosed data up to 31 October, a few days after The Detail and the Guardian exposed the incidents of wrongful suspension.
The letter stated that “3,673 out of 23,794 customers” had “their eligibility subsequently confirmed”, in other words their payments were wrongfully suspended.
The treasury select committee later said that HMRC had been “cavalier” and made a “costly error” by using faulty data to assess child benefit claims
Uproar
The move by HMRC caused uproar when it was first exposed by an investigation by The Detail.
Northern Ireland families who had gone on holidays from Belfast but returned via Dublin airport suddenly found their child benefit stopped.
A joint investigation by The Detail and the Guardian found that the problem was in fact spread across the country, with hundreds of parents in Britain had also been hit after it emerged the basis for the benefit suspension was Home Office data based on unconfirmed passenger bookings and incomplete exit and entry border data.
One woman told how she had had her benefit stopped after she apparently had not returned from a trip to Norway – a journey she never made, as the wedding she was due to attend was cancelled.
Another woman told how her benefit was stopped after she failed to make a flight as she had become seriously ill and was in intensive care with sepsis at the time of the alleged emigration.
A third was told her benefit had been stopped after one of her children had an epileptic seizure at the departure gate and they could not continue with their holiday.
In a new case uncovered by The Detail, one parent in England revealed she hadn't even booked a flight out of the country, but was still hit by the benefit freeze.
Tina Pearson, a single parent in east Yorkshire, saw her Child Benefit payments stopped when HMRC claimed she had moved to Spain - a country she has never been to.
She said she doubted the authority of the letter and ignored it, until she noticed her payments stopped.
"I haven't left the country in three years, I don't have a passport. I've never been to Spain," she said. "So it just seemed like a really weird letter to get.
"I ignored it, I thought 'Oh that's a scam'. And then my child benefit didn't go in."
She then contacted HMRC, and her case was reinstated a week later.
Mr Pearson said she has contacted the Home Office, and is worried she is the victim of identity theft as an explanation for the phantom trip.
It was previously revealed that errors in Home Office databases had caused people’s data to be mixed up, often with that of complete strangers.
HMRC had based its decision on incomplete Home Office records and apologised within days of the error being exposed.
It started a national rollout of the anti-fraud system in the late summer after a pilot scheme last autumn.
Experts at the Open Rights Group have raised serious data protection concerns about the HMRC scheme and want to know if “risks were identified but ignored”.
Mariano delli Santi, legal and policy officer, said: “My question is, ‘Where is the Information Commissioners' Office? Where is the regulator?’
“Why didn’t they open an audit? Why didn’t they open a formal investigation?
“These are things that politicians are starting to ask - but MPs don't have investigatory powers that ICO does.
"It is an established fact that harm has occurred due to HMRC data processing, there is strong evidence that HMRC has not complied with key data protection requirements, and there is evidence that suggests this may be intentional non-compliance.
“The ICO has the power to order the government to stop doing this.”
A spokesman for the ICO said “We remain in contact with HMRC regarding the issues raised, and we are considering the information provided. We expect organisations to demonstrate how their use of personal data meets legal requirements, particularly where decisions may have significant impacts on individuals."
A HMRC spokesman said they take data protection issues seriously.
"The pilot showed that we can use international travel data effectively to tackle error and fraud, and it remains our best assessment for this compliance activity.
“Using travel data as a risk indicator allows us to narrow down our inquiries, meaning we contact less than 2% of Child Benefit customers rather than asking all recipients to regularly reconfirm their eligibility.”