Chancellor George Osborne is facing a legal challenge after two private landlords launched a crowdfunding campaign on Boxing Day.

Chris Cooper and Steve Bolton are seeking a judicial review of the notorious Clause 24 of the Finance Act 2015.

That was the announcement in the July Budget which will reduce the amount of mortgage interest that landlords can claim against tax, and mean that landlords will be taxed on turnover, not profits.

Critics say that the change will mean that some landlords will find that they are thrust into a higher tax bracket, and could find themselves paying tax even where they are making losses.

There is also anger that the measure targets smaller private landlords only. Wealthier landlords without mortgages will not be affected, and nor will companies, including those that borrow money to fund expansion of their buy-to-let portfolios.

Cooper and Bolton say that they believe Clause 24 breaches human rights and/or EU law.

Landlords have repeatedly warned that rents will have to rise because of the change, and that the real victims will be tenants.

Letting agents and suppliers to the lettings industry are being urged to support the action.

Cooper and Bolton had hoped to raise an immediate £15,000, followed by a further £35,000, via the website Crowd Justice.

By the weekend, the total £50,000 target been met, with £50,016 raised from 739 backers, with 25 days still to run.

The challenge is to be based on the argument that the change in tax flouts “a long-established principle of taxation that expenses incurred wholly and exclusively for the purposes of the business are deductible when calculating the taxable profits”.

Cooper is a part-time landlord while Bolton is founder of Platinum Property, a buy-to-let training franchise company.

Bolton said: “It’s not clear why the Government has chosen to just launch an attack on buy-to-let owner-operators with mortgages.

“It’s a tax from Alice in Wonderland – truly absurd and divorced from real life. Not only is this tax grab unfair, undemocratic and underhanded, but we believe that it could also be unlawful.”

In an ironic twist, the pair are planning to hire Omnia Strategy, the legal firm founded by Cherie Blair – wife of the Labour former prime minister.

A pre-action protocol letter is to be sent to the Government this month, with an application for a judicial review to be filed by February 17.

There is also a petition which has attracted strong support. But while it is around halfway towards forcing a Parliamentary debate, the timescale is closing in, with January 27 the deadline to reach 100,000 signatures, at which point there must be a debate.

https://www.crowdjustice.co.uk/case/clause24/

https://petition.parliament.uk/petitions/104880