HUNDREDS of investors in York who have bought homes to rent them out could be hit by tax demands going back six years if they have failed to pay enough cash to the Government.

HM Revenue and Customs has identified 80,000 people across the country who have not paid enough tax.

This is because they have failed to declare how much rental income they receive, claimed too much tax relief, or failed to declare capital gain they have made from selling a property.

The law allows the Revenue to claw back unpaid tax for the previous six years meaning, those affected could face huge bills.

Debtors may also face demands for interest and penalty charges.

One estate agent in York believes the move could affect hundreds of people in the city.

Geoff Stericker, a partner in The Buy And Let Property Shop, in Whip-Ma-Whop-Ma Gate, said there must be thousands of homes in York which had been bought as buy-to-let properties and the owners of a percentage of these would not have paid the correct tax.

Mr Stericker said: "If you don't declare your income to the Inland Revenue, you will be taxed on it. If you have a buy-to-let, you should have an accountant, that's always our advice as it could save you money."

He said the buy-to-let phenomenon had now virtually taken over the first-time buyer market because people were looking to rent rather than buy.

He estimated that, in York, buy-to-lets represented about 50 per cent of the first-time buyer market.

He said: "There will be a percentage of those people who have not declared the income for tax purposes. I've come across them and recommended that they see an accountant. But people's tax affairs are their own responsibility."

Veronica Jones, a negotiator at Grays & Co, in Skeldergate, agreed there would be thousands of buy-to-lets in York and that the market is buoyant.

But she said some people would legitimately be able to avoid tax by ploughing rental money back into other properties and through concessions on home improvements.

Dawn Wilson, the office manager of Sinclair Properties, in Main Street, Heslington, which specialises in student lets, said lots more investors were entering the buy-to-let market.

She said: "We've seen a considerable increase over the last couple of years and with the university expanding that will attract outside investors. We can recommend to landlords that they speak to accountants, but it's up to them whether they do that."

A spokesman for HM Revenue and Customs said the news was nothing out of the ordinary.

He said: "We are not planning a tax crackdown or to otherwise target landlords. We met with representatives of the accountancy profession last week for their views on how we can best inform landlords of their existing obligation to report their property income to us and how we can help landlords to make accurate returns that don't require further work. This will benefit taxpayers and HMRC."

He added the figure of 80,000 related to the number of people who might benefit from contacting HMRC and the Revenue did "regard the buy to let market as being any less scrupulous than any other".