HMRC accepted ‘tolerable’ risk of harm in child benefit fraud crackdown

UK tax authorities believed that withdrawing child benefit payments from parentswithout prior consultation as part of an anti-fraud drive carried a “tolerable” risk, with only a “remote” chance of inflicting harm, according to internal documents.The revelations come just weeks after it emerged that at least 63% of those who had their child benefit stopped were in fact still living in the UK and had not emigrated, as inferred by incomplete Home Office data used in the crackdown.Senior HM Revenue and Customs officials are due to be questioned about the episode by the Treasury Select Committee on Tuesday, which last year said the department appeared to have been “cavalier with people’s finances”.The controversy began after HMRC suspended almost 24,000 child benefit accounts between July and October. Parents received letters referring to overseas holidays – sometimes dating back as far as three years – for which the Home Office had no record of a return journey.By 30 November, almost 15,000 of those families had been confirmed as legitimate claimants, while only 1,019 (4.3%) were found to involve incorrect claims, prompting widespread criticism over HMRC’s use of incomplete Home Office data. Thousands of cases remain unresolved, and the number of legitimate claimants is expected to rise further.Documents released under freedom of information laws show HMRC recognised a risk that Home Office data would wrongly flag families as having emigrated, but deemed that risk remote and tolerable.This was despite evidence from a pilot scheme showing travel data was wrong in 46% of cases. Of those investigated for suspected fraud during the pilot, more than a third were ultimately found to be legitimate claimants.During the wider rollout, checks against PAYE records were removed to “streamline” the process – a decision that contributed to widespread errors, leaving parents suddenly stripped of their benefits.One woman, whose benefits were stopped, had travelled to France to collect her husband’s remains after his death, but was caught in the HMRC net because the Home Office did not have a record of her return to the UK.Another parent travelled from Devon to Dublin for his sister’s funeral yet the Home Office had no record of his return journey from Dublin to Bristol.Officials thought the “severity of the harm” was “minimal”, despite families reporting considerable stress and missed payments as they scrambled to amass evidence to prove they had not emigrated. They believed errors could be mitigated through the appeals process.The flaws in the Home Office data were exposed by an investigation by the Detail and the Guardian in October, which found thousands of parents across the UK had their benefits suspended simply because Border Force had no record of their return from a holiday or business trip.Among the dozens of people who contacted the media about the problem was a woman who said her benefit was stopped after she was wrongly recorded as not having travelled to Norway for a wedding that was later cancelled.Another parent was in intensive care with sepsis at the time she was alleged to have emigrated. The Home Office had a record of her flight booking to Italy but not whether she had flown.In another case, a woman was told her benefit had been stopped despite abandoning a holiday when one of her children had an epileptic seizure at the airport departure gate.Others who had booked and rearranged business trips also had their benefits stopped. Documents show that officials appear not to have raised the possibility that the Home Office travel data was incomplete or unreliable, instead focusing on legal processes around data sharing and the risk of breaches.One Guardian reader who submitted a subject access request to obtain the records relating to their personal data was told in the Home Office’s response: “Any travel history provided should be interpreted as an intention to travel and not as proof of travel. The carrier should be approached directly if the information is required for an official process.”The data protection impact assessment (DPIA) documents also concluded there was no need to contact parents before suspending payments.Mariano delli Santi, the legal and policy officer at Open Rights Group, said the documents showed it was “obvious that the DPIA was conducted poorly … The purpose of a consultation within a DPIA is not to inform but to gather feedback and identify potential risks.”An HMRC spokesperson said the department took data protection very seriously.Commenting on the new systems introduced after the scandal was exposed, it said it now cross-checks data and gives customers an opportunity to confirm they are living in the country before any suspension of payments occurs.“International travel data gives an indication that a customer may no longer be eligible for child benefit,” the spokesperson said. “We then conduct our own checks and open inquiries where necessary, giving customers at least one month to provide evidence, before making any decisions on eligibility.“This enables us to tackle error and fraud without asking all child benefit customers to regularly confirm their continued eligibility.”