HMRC has issued new letters to the Treasury Committee this month updating it on two major errors
HMRC has issued apology letters this month outlining updates on two significant errors that have affected large numbers of UK taxpayers. The letters, sent in September to Dame Meg Hillier, Chair of the Treasury Committee, detail how the UK’s tax-collecting authority made serious mistakes in two key areas, and address the matter of payments or repayments for those affected.
John-Paul Marks, First Permanent Secretary and Chief Executive at HMRC, sent the letters ahead of a committee hearing this week. In the first letter, he provided an update on errors relating to an HMRC child benefit compliance exercise.
It emerged in March this year that HMRC had relied on flawed Home Office travel records to conclude that thousands of parents who had travelled abroad for holidays or work were fraudsters, resulting in child benefit payments being halted for 23,800 families late last year.
It was subsequently discovered that the Home Office had failed to log their return journeys and, in certain cases, had incorrectly recorded individuals as having left the country despite never having boarded their booked flights, the Guardian reported.
Around 13,800 households were later found to have had their benefits wrongly suspended. The final “success rate” of the scheme — revealed as 40% on 13 March by Mr Marks to the Treasury Committee — laid bare the scale of the blunder.
In his latest letter updating the committee on the failings of that exercise, which can be viewed here, he said: “HMRC has a responsibility to use data effectively to protect public money and tackle error and fraud in the benefits system. However, that must be done in a way that is fair, carefully controlled and with proper safeguards for customers. I agree with the NAO’s [National Audit Office’s] findings that errors were made in the initial use of the data and intend to implement all of the recommendations they have set out.
“The NAO report recognised that the activity identified significant levels of non-compliance and helped prevent incorrect Child Benefit payments. It also highlighted shortcomings in HMRC’s implementation of the expanded exercise and the impact this had on some of our customers.
“The report acknowledged that HMRC responded within 2-4 weeks to make changes to the intervention process following problems emerging in the first rollout. Where HMRC confirmed customers as still eligible for Child Benefit, we apologised for the disruption caused and reinstated awards, with payments backdated to ensure that they received their full entitlement.”
He went on to state that HMRC has moved this compliance exercise from ‘hypercare’ – meaning extra attention is paid to it – back into a controlled business-as-usual process.
State pension HMRC errors explained
In the second letter – which can be seen here – he addressed the committee chair on a historical error in the taxable State Pension figures used in certain tax calculations. An incorrect State Pension figure was used in PAYE end-of-year reconciliations and this fed through into Self Assessment pre-population information and Simple Assessment calculations.
HMRC said when admitting the issue in July that this had resulted in a difference between the correct State Pension figure for tax purposes and the figure actually used in the calculation. In his letter this month, he said: “Since my previous letter, HMRC has made progress addressing the issue, firstly fixing forward to ensure these errors do not occur again, and secondly on correcting recent years for customers in future.
“On 25 August, HMRC implemented the change needed to ensure that future annual reconciliations for PAYE and Simple Assessment customers use the correct State Pension figures. These customers account for the substantial majority of those affected. We also expect to correct the pre-populated figures for Self Assessment customers who have not yet submitted their 2025–26 returns during September. We will correct the position for those that have already filed their 2025-26 return soon after.
“This should resolve the problem for 2025-26 and prevent it recurring in future, and we will monitor this carefully and can provide a further update if helpful. Looking backwards, we will identify affected customers and correct their tax positions for recent years, without requiring them to make a claim.
“This proactive exercise will cover the tax years from 2020–21, the maximum period for which the available data enables us to identify and correct cases reliably and efficiently. As a result, we estimate that approximately 3.2 million customers will receive tax repayments totalling around £19.3 million.
“Repayments will be made through PAYE coding adjustments, credits to Self Assessment accounts or, where necessary, other payment methods such as payable orders. We expect to complete the majority of corrections and repayments during the 2026–27 financial year.
“If customers believe they were affected in earlier years and have the necessary evidence, they can ask HMRC to review their position. These requests will be considered on a case-by-case basis. I am sorry that this error occurred and recognise the impact on affected customers. As set out in my earlier letter, we will also conclude an Internal Audit review, ensuring the lessons are identified and applied in future.”
You can contact HMRC here. The Treasury committee met this week. You can see the full hearing here.
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