They may well be right. The relevant legislation is S5(5) of the Child Trust Fund Act 2004 here:
http://www.opsi.gov.uk/acts/acts2004/20040006.htm#2
Child with HP would appear to be caught by all 3 of the three categories in S5(5) and therefore would not be an eligible child. I don't think they'd have right of abode, and presumably aren't family members of an EEA national (or they wouldn't need HP). "Settled" status in S5(5)(c) is effectively the same as ILR, which is probably where HMRC are coming from.
They wouldn't be subject to imm control in the way we normally think of it (S115 of the Asylum and Immigration Act 1999) but that isn't the test for Child Trust Funds.
It might be worth having a look at the Child Trust Fund Regulations 2004 (SI 1450/2004) - I couldn't see anything there to modify the rule in S5, but I only had a quick look.
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