The benefit is normally stopped if someone spends more than eight weeks living outside the UK, but many of the people affected complained the tax body stopped their payments after they went abroad for a holiday.
Families who flew out from Belfast but returned to Northern Ireland via Dublin Airport found themselves losing benefit payments because the Government thought they had moved abroad, as there are no checks on the Irish border.
It comes after the Government began a new crackdown on child benefit fraud as part of an attempt to save £350m over the next five years.
The system allows HMRC to use Home Office international travel data to assess whether people are still living in the UK.
But all the affected cases are now being reviewed after a growing number of complaints from people who briefly left the UK and returned to find their payments had been stopped.
The problem, first reported by The Detail website, was initially identified in Northern Ireland after some families had flown out of the UK from Belfast and then returned to Dublin, in the EU, before driving home over the border.
According to the Guardian, almost half of the families initially flagged as having emigrated were still living in the UK.
Families in other parts of the UK were also affected, for example, one family that flew to France for a holiday but returned via ferry and a passenger who had simply failed to board a flight after her child fell ill at the departure gate.
The newspaper reported that the scheme saved HMRC £17m but left 46% of the families targeted incorrectly suspected of fraud.
In Northern Ireland, 78% were incorrectly identified as not having returned from trips abroad. Some 129 families were flagged during the pilot as having left the country when only 28 had actually done so.
“We have information that shows that you left the UK on May 19, 2025 and travelled to Italy. This was more than eight weeks ago, and we have no record of your return,” the HMRC letter to one woman read.
Those wrongly identified then faced a barrage of 12-page list of questions in order to prove they still lived in the UK to get the benefit reinstated.
Holidaymakers returning to Northern Ireland have found their child benefit cut off after HMRC accused them of emigrating
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HMRC told The Guardian it will no longer use data on travel through Dublin airport to assess fraud because it is part of the common travel area, and will not stop benefits before cross-checking with the person concerned and looking at PAYE records. However families will still have to prove their entitlement, despite no fault on their part.
A spokesperson for HMRC said: “We’re very sorry to those whose payments have been suspended incorrectly.”