Preparing for an HMRC Audit or Compliance Check: A Practical Guide

20/09/2025

An HMRC audit or compliance check can be a daunting experience, particularly if you are facing one for the first time. However, with the right preparation, the process can be navigated smoothly and with minimal disruption to your business. This guide outlines best practices to follow in advance, what to expect during the process, and how to deal with the outcomes effectively. 

Officially known as a tax compliance check, this process is also commonly referred to as an HMRC audit, tax investigation, or HMRC tax audit. HMRC carries out these checks to ensure businesses and individuals are paying the correct amount of tax.

You will usually be notified by letter, although HMRC may also make contact by phone. There are three main types of compliance checks:

1. Full Enquiry – A detailed review of the entirety of your business records, typically undertaken if HMRC believes there is a risk of significant errors. In this case, seeking professional advice from an accountant is strongly recommended.

2. Aspect Enquiry – A focused review of a specific area of your tax return, such as a single deduction or reporting inconsistency. 

3. Random Check – These are selected on a sample basis and may apply to any taxpayer, regardless of their compliance history. 

If you use an accountant, HMRC may contact them directly, which can immediately reduce the burden on you.

Proactive preparation is the best way to ensure the process runs smoothly:

• Maintain Accurate Records – Keep copies of all invoices, receipts, and supporting documentation, clearly matched to entries in your accounts.

• Use Modern Systems – If you are still using manual bookkeeping, consider switching to a cloud-based system for improved efficiency and transparency.

• Engage Professional Support – A qualified bookkeeper or accountant can help maintain compliance and ease the administrative burden.

HMRC may:

• Request documents to be submitted directly.

• Arrange a meeting at your premises, your accountant’s office, or their own offices.

Failure to provide requested information, or refusing access, can result in penalties. It is therefore important to remain cooperative and transparent. This approach will also help speed up the process and minimise business disruption.

You are entitled to have your accountant or legal adviser present at any HMRC visit. This is advisable, as it ensures clear communication, protects your business interests, and provides professional representation should any issues arise.

Following the review, HMRC will confirm the outcome in writing. The results may include:

• A Repayment if you have overpaid tax.

• A Repayment Demand if you have underpaid, often including interest.

• Penalties, depending on the circumstances of any underpayment. Factors include the reason for the error, how cooperative you were, and whether you proactively disclosed mistakes.

If you disagree with HMRC’s findings, you have the right to appeal their decision.

At Turbin and Turbin, we provide expert support at every stage of the compliance check process. From maintaining compliant bookkeeping records in advance, to representing your interests during an inspection, through to managing any post-check outcomes, our tailored approach ensures your business remains fully protected. With our expertise, you gain peace of mind that your tax affairs are handled with diligence, accuracy, and professionalism. 

In preparing this article every effort has been made to ensure the content is up to date and accurate, however it is no substitute for professional advice. You should not make any decisions based solely on the information presented in this article.