Revenue head quits after massive data breach

The head of HM Revenue and Customs (HMRC) has quit following news that his department lost details of as many 15 million child benefit claimants, according to media reports.

Paul Gray resigned ahead of a statement at the House of Commons by Chancellor Alistair Darling at 3:30pm.

According to media reports, the lost data - which had been held on discs - included names, addresses, birth dates, bank details and National Insurance numbers. "There has been a big data loss," a government source told Reuters.

The BBC said ministers had been aware of the breach for some nine to 10 days.

In a letter to the HMRC, Gray wrote: "I am announcing today that I will be standing down as HMRC chairman as a result of a substantial operational failure in the department."

He added: "This is not the way I would have planned to organise my departure from HMRC."

This isn't the first data breach for the HMRC, as a laptop was stolen from a car boot last month and a disc went missing containing pensioners' details earlier this month.

Analyst firm Gartner warned that this breach could potentially be extremely dangerous because it involves bank account details, which are much more valuable than credit card numbers or tax numbers.

Analyst Avivah Litan said: "In fact, in the black market, bank account numbers sell for the highest price - or between $30 and $400, which is significantly more than the fifty cents to five dollars that criminals pay for credit cards."

Litan said all banks potentially affected will need to closely monitor all fund transfers for fraud. "If evidence emerges that the data fell into criminal hands, the UK banks may be forced to shut the 15 million accounts down and reissue new ones, at an enormous cost to them and a major inconvenience for their customers, especially since customers typically set up automated payments and transfers to their accounts. Debit cards that link to the old accounts may also have to be closed and reissued," Litan said.

HMRC declined comment, saying the reasons for the resignation would be outlined in the chancellor's statement to parliament.

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