Question to the HM Treasury:

To ask the Chancellor of the Exchequer, with reference to the Cabinet Office's press release entitled Child Benefit action to save £350 million from claimants abroad, published on 22 August 2025, what steps her Department is taking to identify people who were erroneously identified as fraudulently claiming Child Benefit on the grounds that they had been outside of the UK for more than eight weeks.

As part of its ongoing efforts to reduce error and fraud in the Child Benefit system, HMRC ran a pilot last year using data on international travel and UK employment for a random sample of 200,000 Child Benefit records. This was to identify and remove people from the system who had left the UK for more than twelve weeks but continued to claim Child Benefit despite no longer being eligible.

The pilot used Home Office data on international travel as the best starting point for indicating potential unreported absences in the UK. From this data, HMRC undertook checks of PAYE systems to look for continuous UK employment before sending compliance enquiries. No Child Benefit awards were ended without attempting contact with claimants first, to clarify their residency status.

HMRC’s evaluation of the pilot showed that, of the 3,656 customers that were sent enquiry letters, 933 were confirmed to be eligible, with nearly three-quarters found to be non-compliant. In all, the pilot had prevented around £17m in wrongful payments. This led to a wider rollout announced at the Autumn Budget 2024, which is expected to save £350 million over the next five years. Using PAYE and international travel data in this way is considerably more proportionate than requesting all claimants reconfirm their eligibility to HMRC frequently. It is in line with HMRC’s risk-based approach to compliance.

In expanding the process last month, the PAYE check that had been present in the pilot was inadvertently omitted on around 23,500 enquiries. Based on the insight from the pilot, HMRC expect that most of these cases will have been correctly suspended.

HMRC has taken immediate corrective action to resolve this issue. The employment check has been reinstated for all future cases, meaning fewer people will be sent letters in the first instance. HMRC will also perform further checks, including against PAYE records for enquiries already opened, before formally terminating awards.

In addition, HMRC will no longer suspend payments at the outset and will give customers one month to evidence their continued entitlement first. Together, these changes ensure a proportionate approach for customers while balancing the need to protect against losses to the taxpayer.

HMRC has set up a dedicated team to quickly unsuspend payments, where it is able to confirm with the customer that they remain entitled to Child Benefit. This includes where HMRC had failed to first check for UK employment, which led to enquiries being issued in error. Customers affected by the issue who believe they are still eligible should call the number on the letter they received, so that this dedicated team can handle their cases swiftly. Where eligibility is confirmed, payments will resume and HMRC will make backdated payments, so no one is left out of pocket.

HMRC has reinstated payments for 589 claimants, as at 28 October. This includes 134 cases for customers in Northern Ireland where employment checks were retroactively applied. HMRC has also reinstated payments for a further 46 Northern Ireland customers while their residency status is confirmed.