Landlords are being encouraged to get their accounts in order after an accountant specialising in buy-to-let property warned that HMRC is intensifying its efforts to track down those with undisclosed income.

Since the government launched its Let Property Campaign in 2013 – an initiative which allows landlords to declare unpaid tax in return for a discounted penalty – more than 58,000 disclosures have been made to the authority and approximately £250m has been recovered in unpaid taxes.

Despite this success, HMRC has been intensifying its efforts to track down landlords with undisclosed income, and many landlords are now facing demands for back payment of taxes and associated interest, as well as facing large fines.

Penalties for undisclosed income can be hefty, ranging from 10% and rising to 100% of the rental income in some cases. Furthermore, landlords who receive letters demanding payment from HMRC will pay substantially more in fines compared to those who declare their income voluntarily.

Donna McCreadie, a buy-to-let specialist at Perrys Chartered Accountants, commented: “HMRC has numerous ways to find individuals who haven’t declared rental income, and their resources for investigating are extensive.

“These include gathering information from HM Land Registry and Stamp Duty tax returns, reviewing reports from lettings agents and tenancy deposit scheme providers, carrying out online searches, making door to door enquiries, receiving reports from members of the public and collecting information from other government departments, such as the electoral register.

“The law allows HMRC to go back up to 20 years and, in some cases, HMRC may carry out a criminal investigation.”

“It is important to remember that not declaring rental income is a criminal offence,” she added.