In October 2007, HM Revenue and Customs (HMRC) sent two discs containing the child benefit database to the National Audit Office (NAO) through TNT’s unregistered internal mail. The package was sent on 18 October, the NAO reported it missing on 24 October, and senior HMRC officials were informed on 8 November. Chancellor Alistair Darling disclosed the breach on 20 November. The discs contained records for about 7.25 million families—approximately 25 million people—including parents’ and children’s names and addresses, children’s dates of birth, and parents’ National Insurance numbers and bank or building-society details.
The failure was attributed not merely to junior staff but to weak senior controls: HMRC had declined to remove sensitive bank information after the NAO requested it, reportedly because the work would cost £5,000, while a later academic study estimated the cost at £650. The discs were not registered, and their WinZip 8 password protection was described as vulnerable compared with later AES encryption. The incident breached the UK Data Protection Act, prompted Metropolitan Police and Independent Police Complaints Commission investigations, and led to HMRC chairman Paul Gray’s resignation. Darling said there was no evidence the information reached criminals, but the breach intensified scrutiny of government data handling and national-ID ambitions.
