No Hiding Place For Taxpayers

by Jeremy Hetherington-Gore, Tax-News.com, London

08 October 2008

This week's admission by German telecommunications company, Deutsche Telekom, that subsidiary T-Mobile lost confidential data on 17 million clients, including telephone numbers, dates of birth, addresses and email addresses, is merely the latest in a long line of personal data leaks that undermine belief in the security of data-bases.

Last month the Norwegian Tax Authority mistakenly included personal identity numbers on CDs of tax returns for effectively the entire population which it routinely sends to the newspapers under freedom of information laws. The personal identity number contains the birth date, gender and residence status of each individual, and could be used in identity theft. The Tax Authority asked for the CDs back, but Norwegian commentators say that the data had already been widely copied. Apparently 'someone forgot to check' the CDs before they were sent out.

But the palm for losing data has to be handed to the UK's HMRC. In 2007 two CDs with 25 million sets of child benefit records were put into the general mail and disappeared. They contained names, addresses, dates of birth, child benefit numbers, National Insurance numbers and bank or building society account details. Rather unfairly, the Chairman of HMRC was made to fall on his sword. And in 2005 the parliamentary Public Accounts Committee revealed that housekeeping software installed by the Inland Revenue to delete old cases also deleted almost one million live tax records between 1997 and 2000.

Those incidents were accidental, unlike the theft of a CD from LGT Treuhand, a subsidiary of Liechtenstein's LGT bank, in 2002, containing client details for 1,400 confidential accounts, which is said to have been sold for EUR4.5mn to the German intelligence services. Then in 2005, in a separate theft, 2,325 account statements were stolen from Liechtensteinische Landesbank AG, which the bank tried to buy back for up to CHF12m.

Also not accidental were the court cases in which the US and UK tax authorities obtained court orders forcing a wide range of banks to divulge the identities of hundreds of thousands of offshore account holders, who they are now pursuing for back taxes.

The bottom line is, if you don't want your data falling into the wrong hands, don't give it away to anyone! But that is impossible in this day and age for a law-abiding person, so you might as well accept that there will be no secrets in future. And who knows, you may be a vice-presidential candidate one day, in which case your tax returns will be on the front page of the Wall Street Journal. No hiding place!

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