The former chairman of HM Revenue & Customs, who resigned after the department lost two computer disks containing 25 million child benefit records, has received a payoff of more than £300,000.

Paul Gray, who resigned last November, earned £120,000 to £125,000 for 2007/08 and received a lump-sum payment of £137,591 on resigning, according to HMRC’s annual accounts published this week.

Gray, who was in the top role for less than a year, will also receive monthly payments totalling £49,292 until his retirement on 2 August this year.

HMRC said the payments complied with ‘civil service contractual terms’.

Matthew Elliott, TaxPayers’ Alliance chief executive, said: ‘This is a shocking example of the culture of rewards for failure that bedevils the public sector.’

Tory accountant MP and former paymaster general David Heathcoat Amory said: ‘It does seem slightly excessive. This sends a very bad signal to the private sector, which is frequently criticised for generous pay-offs for failing executives.'

The report also revealed that the National Audit Office refused to sign off HMRC accounts because of a £1.5bn overpayment in tax credits. HMRC now has a strategy to reduce errors.

Further Reading:

Read the HMRC annual report

Read the Poynter review into the lost discs affair