HM Revenue & Customs has begun a crackdown on buy-to-let investors who have not declared their rental income.
It has sent out an initial 500 letters targeting landlords who it believes may not have declared their BTL properties on their tax return.
The letters ask landlords to provide details of their property investment activity over the past six years, including a detailed breakdown of costs such as repairs and professional fees.
HMRC will look at the results of the initiative before issuing a further 1,500 letters over the next few months.
Accountant Wilkins Kennedy says HMRC has been gathering lists of landlords from letting agencies for years but this is the first time it has launched a concerted campaign against landlords.
Senior tax partner Peter Goodman says: “There has often been speculation that HMRC would start a compliance drive against landlords but until now enquiries have been pretty piecemeal. This is a change in tactics.
“Individuals who receive these letters need to take them seriously. If they do owe tax, they should consider early disclosure as part of a negotiated settlement. This may reduce the penalties they incur. People who refuse to cooperate with HMRC on this could ultimately face crim-inal prosecution.”
An HMRC spokesman says: “Far from being a crackdown, HMRC has been working closely with professional bodies throughout this process and they have been supportive of the approach we are taking.
“This is a process of writ-ing to people to remind them of their responsibilities in relation to tax on rental income and ensuring that everyone pays the right tax under the law. HMRC has a responsibility to reduce non-compliance across the economy in the interests of creating a level playing field for all taxpayers.”