Buy-to-let investors are being warned to get their affairs in order as the government launches a crackdown on landlords paying erroneous amounts of tax.
With a huge increase in the number of buy-to-let properties in recent years, tax officials are now using new computer software to look through letting ads and have set up a whistle-blowing phone line to make sure they get their fair share.
The Inland Revenue estimate some 700,000 landlords may be paying the wrong taxes and, since the phone line was launched last week, more than 100,000 calls have already been received.
John Whiting, accountant at Price Waterhouse Coopers, told the Times: "There is widespread confusion about how both income and capital-gains tax apply to buy-to-lets, as shown by the latest crackdown. Many people we see do not realise that tax on property needs to be declared."
Figures released by the Council of Mortgage Lenders last week showed that the buy-to-let market continues to grow, with 350,000 new landlord mortgages taken out during 2006.
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