Property is, apparently, such a sound investment that the taxman has decided that he, too, should reap a bonanza. As we report today, HM Revenue & Customs intends to target 80,000 individuals who are part of the sizeable army of buy-to-let investors. Those who purchase houses for the purpose of acquiring rental income have long been able to balance the tax that is paid on this money earned by offsetting repayments on their mortgages. While there are some in the Treasury who might view such an arrangement as unduly charitable, the rental market could not operate as it does without this lubrication. Buying to let is a process that benefits those who own the property, those who live in such houses and thus society as a whole. This is not a cynical scam, nor does it represent a return to the Rachmanism of the 1950s that prompted tighter regulation.

This is, nonetheless, a complicated realm financially. Landlords can only reclaim tax deductions legally for the interest-only aspect of any mortgage. They should not be asking for relief on the capital element of any loan. Many buy-to-let investors thought that their financing arrangements did only cover the interest repayments. In fact, in some cases there was a capital dimension to it. The Revenue has latched on to this mistake and will be attempting soon not just to inform investors of their misunderstanding but also to reclaim tax payments stretching back up to six years. This retrospective demand includes interest charged on the sum that landlords did not appreciate that they owed. There will also be penalty charges for failure to make a timely declaration of money that they had not realised they should not be claiming in the first place.

It is, of course, the Revenue’s duty to prevent tax evasion. It should, however, be prepared to acknowledge where a situation is confusing and place its emphasis on clarifying the position so that future tax payments are entirely accurate. It is unreasonable to work on the assumption that buy-to-let investors have sought deliberately to defraud the tax authorities in the past and that they should be punished by heavy extra interest charges and demands for penalty payments. This is a relatively new sector, in that it has expanded dramatically in the past decade to the point today where there are more than 400,000 landlords in the country. This market would, though, face a severe blow if the taxman were to impose huge bills on part-time landlords, effectively turning what had previously been a profitable and socially useful investment into a criminal activity.

This initiative is part of a pattern that has emerged since the Inland Revenue and the Customs and Excise service were merged into a new HM Revenue & Customs. What had often been a pragmatic approach to tax collection appears to have been superseded by an ethos in which taxpayers are treated as suspects and an ever more inquisitorial attitude is witnessed in areas where the law is ambiguous or has been misinterpreted.

Such an instinct arouses the hostility of taxpayers (corporate and individual) and is adding further to the cost in money and time of complying with the Revenue. Gordon Brown claims that he is encouraging his “bouncers” at the Revenue to be more humane in their treatment of taxpayers. And yet those very same “bouncers” are about to hit 80,000 citizens retroactively and punitively. They clearly enjoy their work a little too much.