Residential landlords and accountants who look after their Buy to Let interests have been sent letters by HM Revenue & Customs asking for details of any tax that has not been paid on money made from letting or selling a property.

Similar action has been taken in the past, but this latest move, which has been called ‘Property Campaign’ by the Revenue, is being seen as a major crackdown that some financial specialists are predicting will recoup millions of pounds.

The letter from HM Inspector begins: “I have information that suggests that your client has received rent from property but has not included it in his/her Tax Return. I need to check with you if my information is correct and, if he/she has received rents, to work out any tax that may be due.”

It concludes: “This is not a formal enquiry to which your client is legally obliged to respond. However, it is an opportunity to put right any errors as quickly as possible. By getting in touch you may help to reduce any penalty that could be charged and avoid further action by this office.”

Revenue and Customs officials are believed to have gathered data from letting agencies which they have compared against stamp duty figures.

Any offences uncovered will result in landlords having to repay taxes dating back six years. They could also face additional fines and penalties equal to 100 percent of the total tax owed.

Residential landlords have been put into two groups by the revenue, existing taxpayers who have let a property but have not disclosed any income, and individuals that have no tax record but where HMRC have discovered they let property.

If landlords fail to reply, the Revenue said in extreme cases it would begin criminal investigations.

Tax experts have warned that although there is no legal requirement on a landlord to respond to the letter, ignoring it could result in further investigation and less options if and when it came to negotiating with the HMRC.

The fact that many landlords and their accountants may not have received one of the Revenue letters recently doesn’t mean they will not get one. This first batch is part of a pilot exercise and more letters are expected to be sent out later this year.