HMRC is currently reassessing its decision to halt approximately 23,500 Child Benefit claims. Normally, Child Benefit is terminated if an individual goes on vacation for more than eight weeks, but some recipients argue that their claims were unjustly suspended.
In an effort to combat fraud, HMRC implemented a new trial program using travel data to determine if individuals had permanently left the country. However, errors occurred where some individuals were inaccurately identified as not having returned from overseas trips.
The tax authority has issued apologies to those affected by the incorrect payment suspensions. HMRC plans to finalize its review by the end of the following week, reinstating claims and providing retroactive payments where required.
While the pilot program reportedly saved HMRC £17 million, The Guardian highlights that up to 36% of families targeted were mistakenly suspected of fraud.
In Northern Ireland, the error rate was particularly high, with 72% incorrectly flagged as not returning from trips abroad. According to reports, during the trial, 129 families were flagged for leaving the country, while only 28 had actually done so.
HMRC has updated its procedures to allow individuals a month to respond before their payments are ceased, as per a recent statement from the tax body.
An HMRC spokesperson expressed regret for the wrongful payment suspensions, emphasizing their commitment to safeguarding taxpayers’ funds while expressing confidence in the accuracy of the majority of suspensions.
Child Benefit, claimed by over seven million families, amounts to £26.05 per week for the first child and £17.25 weekly for each additional child. Eligibility for Child Benefit includes responsibility for a child under 16 or under 20 in approved education or training.
To qualify for payments, the child typically must reside with the claimant or have similar financial support provided by the claimant. Individuals with high incomes may be subject to repaying a portion of their Child Benefit through the High Income Child Benefit Charge, with the repayment percentage increasing for incomes exceeding £60,000 and reaching 100% for incomes over £80,000.
Repayment of the high income charge can be made via self-assessment or incorporated into the PAYE tax code.