Hundreds of buy-to-let investors are being questioned about undeclared income in a probe launched by Revenue & Customs this week. Financial Times

The Revenue has sent out 500 letters in the first phase of a campaign targeting property owners who may have failed to declare their investments. If it finds evidence of fraud, it can demand tax, interest and penalties going back 20 years.

The letter says: 'I have information that suggests you have received rent from property but have not included it in your tax return. I need to check with you if my information is correct and, if you have received rents, to work out any tax that may be due.'

It plans to evaluate the results of the letters before issuing about 1,500 more letters over the next few months to taxpayers and their agents. Tax advisers said that letting agents and stamp duty land tax returns were likely sources of the Revenue's information about landlords.