I have just filled in form MN1 for my daughter and, out of curiosity, did it online too as I thought it might be simpler and quicker.
In my experience there are differences both in the questions you have to answer and evidence requested.
The positive aspect of the online process is that you are only asked relevant questions and it is much shorter than the paper version. However, it asks additional questions that are not on the paper form. For example, once I had introduced my daughter's passport details, it asked whether she has an ID card too, and then for the ID card details. There is no question about ID cards on the paper form, so the online form is actually requesting an additional supporting document when available.
In the evidence that you have to send, it request the parents' naturalisation certificates if they have already become British. I cannot see anywhere on the paper MN1 for a request to send the naturalisation certificate. Actually it should be very easy for the Home Office to check its details since it is them who issue them.
Finally, whereas with the paper form you have to ask the referees to fill in and sign their section, the online form asks directly for the referees' details, which means you have to contact them in advance and ask for those details. Depending on the nature of your relationship with referees, this may be embarrassing for some people. Also, regarding referees, the online form says they must have known the child for three years. There is no such requirement on the paper MN1 (it is on the AN for adults).
I wonder whether these differences are a consequence of the service being at a beta stage or they will at a point update the paper form to reflect the same requirements.
Anyway, I will be using the paper form as I see it less intrusive.
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