HMRC compliance check preparation: A practical guide

6 November 2026

HMRC compliance check preparation starts with a calm, practical plan and a clear set of records. This article explains what an HMRC compliance check looks like, the documents HMRC will want to see and the steps company directors and small business owners should take to reduce disruption.

Preparing properly reduces stress, shortens the process and improves outcomes when HMRC opens an enquiry or a tax compliance check.

What is an HMRC compliance check and why it matters

An HMRC compliance check is an examination of your tax affairs to ensure reported income, VAT, payroll and corporation tax are correct. It may be called an enquiry, compliance check, compliance visit or routine check depending on the tax area.

HMRC may open a tax compliance check after a random selection, an automated mismatch, new information from third parties or because of a specific risk profile. For limited companies this can cover Corporation Tax, PAYE and National Insurance, VAT and the accuracy of statutory accounts.

Responding promptly and professionally matters because:

It reduces the likelihood of penalties and interest being charged.
It shortens the time HMRC needs to reach a conclusion.
It gives directors confidence and control over any adjustments.

How HMRC will contact you and first steps to take

HMRC usually contacts businesses in writing by post or through your HMRC online account. Sometimes they may call first and confirm details by letter afterwards.

If you receive contact, do the following immediately:

Read the letter or notice carefully and note any deadlines.
Check the scope of the enquiry – which tax years and which taxes are affected.
Log into your online services to confirm any messages – use HMRC online services: sign in or set up an account (https://www.gov.uk/log-in-register-hmrc-online-services).
Appoint a single point of contact within your business to manage the response.
Consider instructing a qualified accountant or tax adviser and confirm whether they should speak to HMRC on your behalf.

Do not make voluntary admissions of error before speaking to your accountant. Be cooperative, but avoid speculative explanations until you have reviewed the documents.

Gather the right records for enquiry – checklist

Good record-keeping is the backbone of HMRC compliance check preparation. HMRC will expect to see complete, clear and contemporaneous records.

Aim to have the following available and organised; these are typical items HMRC will request:

Company statutory accounts and board minutes.
Trial balance and year-end reconciliations.
Sales invoices, credit notes and contracts.
Purchase invoices and supplier contracts.
Bank statements and bank reconciliations for the relevant periods.
VAT returns, VAT invoices and VAT control accounts.
Payroll records, RTI submissions and P60/P11D information.
Director loan account details and shareholder resolutions.
Evidence of expenses and business mileage records.
Grants, coronavirus or other government support documentation and correspondence.
Contracts with customers and subcontractor agreements.
Evidence for capital allowances and fixed asset disposals.

This list is not exhaustive. The exact records for enquiry will depend on the tax being investigated. If HMRC asks for documents you cannot produce, explain why and propose realistic timescales for obtaining them.

Practical steps to get ready in 48 hours, one week and one month

48-hour actions

Acknowledge HMRC contact and diary the response deadlines.
Appoint an internal lead and contact your accountant.
Log into the companys HMRC online account to review any messages.
Assemble the most recent statutory accounts, bank statements and payroll summaries.

One-week actions

Run bank reconciliations for the periods under review.
Produce a simple document index describing where key records are stored.
Pull VAT returns, VAT reports and supporting VAT invoices.
Check payroll RTI submissions, employee pay records and pension contributions.
Draft a chronology of significant events for the years in scope.

One-month actions

Work with your accountant to reconcile the trial balance to statutory accounts.
Prepare clear explanations for any unusual transactions, one-off sales or exceptional expenses.
Consider whether disclosure of prior errors is needed and discuss the potential advantages of voluntary correction with your adviser.
Prepare a communication plan in case HMRC visits your premises.

How to present information to HMRC – format and organisation

Make the examiner's life easier. Well-structured submissions speed up the process and reduce follow-up requests.

When you send documents:

Use a clear covering letter or email summarising what is enclosed.
Provide a contents index and page numbers if sending a large bundle.
Use PDF for scanned documents and keep originals accessible if requested.
Group documents by topic – for example VAT, payroll, bank reconciliations.
Use spreadsheets to show reconciliations and working papers rather than sending raw ledger extracts.

If you use cloud accounting like Xero, make sure access permissions are set for your accountant. For help with daily bookkeeping and keeping records audit-ready, see our Bookkeeping & Xero service (/services#bookkeeping-xero).

Dealing with a site visit – practical advice

A site visit can feel intrusive, but most visits are routine and can be managed with sensible preparation.

Before the visit:

Confirm the identity of the HMRC officer – ask for ID and the correspondence that prompted the visit.
Clear a private space for the officer to work and ensure they have access to relevant records.
Decide who will be present for the meeting and make sure they know the facts.

During the visit:

Be polite, professional and factual.
Do not volunteer extra information beyond what is asked.
Take notes or record the key points of the conversation.

After the visit:

Send any follow-up documents promptly and keep a copy of everything you provide.
Ask for confirmation in writing of the next steps and a likely timescale.

Communication tips – what to say and what to avoid

Tell the truth, be concise and avoid speculation.

Things to say:

Facts about transactions with documentary support.
Where further documentation can be found and an expected delivery date for follow-up material.
Contact details for your accountant or authorised representative.

Things to avoid:

Guessing, estimating or explaining without checking records.
Informal apologies or admissions of guilt without discussing corrective options with an adviser.
Emotional or defensive language.

If you are unsure about how to respond, ask for time to obtain the correct figures and consult your accountant or legal representative.

Working with an adviser – benefits and authority

Having a tax professional involved is one of the best steps for HMRC compliance check preparation. An adviser can:

Communicate with HMRC on your behalf.
Prepare reconciliations and written explanations.
Negotiate timelines and, where appropriate, agree reasonable disclosure or correction plans.
Advise on whether HMRCs “soft landing” procedures may apply.

To allow your adviser to speak to HMRC, complete an authorisation form or provide a written authorisation through your HMRC online services. See guidance on signing in to HMRC online services: https://www.gov.uk/log-in-register-hmrc-online-services.

HMRC soft landing – what it means and when it may help

The term HMRC soft landing is used to describe a cooperative approach where HMRC takes into account a taxpayers proactive behaviour and willingness to correct errors. This does not guarantee leniency, but it can influence the way cases are handled.

Factors that may help secure a soft landing include:

Prompt disclosure of errors.
Full documentation and reasonable explanations for mistakes.
Evidence of improved internal controls and corrected processes.
Early engagement with HMRC via a qualified adviser.

Always ask your adviser whether voluntary disclosure or a formal disclosure facility is appropriate. Do not rely on a soft landing without documented justification from your adviser.

Common triggers for a compliance check and how to reduce risk

Being aware of common triggers helps you prioritise preventative work.

Common triggers include:

Mismatches between company returns and third-party information.
Large or unusual expenses or director transactions.
VAT repayment claims flagged by risk modules.
Discrepancies in payroll RTI reports.
Late or incorrect filings with Companies House.

How to reduce risk:

Keep contemporaneous records for all transactions.
Reconcile bank, VAT and payroll regularly.
File returns on time and ensure Companies House filings match your accounts.
Use good bookkeeping or a managed service — see our Bookkeeping & Xero (/services#bookkeeping-xero) and Payroll & PAYE (/services#payroll-paye) services.

If HMRC proposes adjustments – next steps

If HMRC proposes adjustments you should:

Review the proposed changes with your accountant.
Check the calculations and ask HMRC for a breakdown in writing.
Consider whether to accept the adjustment, appeal or offer a negotiated settlement.
If you accept an error, discuss voluntary disclosure to limit penalties where possible.

Appeals have strict time limits. Discuss timing and strategy with your adviser immediately.

After the enquiry – improving processes and controls

Once an enquiry concludes, use the experience to strengthen controls and reduce future risk.

Actions to take:

Implement or update a record retention policy.
Improve bookkeeping timeliness and reconciliations.
Train staff involved in invoicing, expense handling and payroll.
Introduce a periodic internal review to spot anomalies early.
Consider management reporting to give directors confidence in the numbers – see our Management Reporting (/services#management-reporting) and Fractional CFO (/services#fractional-cfo) services.

Practical templates and working papers to prepare now

Creating a small set of templates will speed responses:

A documents index that maps record types to file paths or cloud folders.
A bank reconciliation template showing cleared and uncleared items.
A VAT control account and a VAT invoice checklist.
A payroll reconciliation linking RTI to payroll journal and payslips.
A transaction note template explaining large or unusual items.

Keep originals in a secure place and scanned copies in a single cloud folder for swift sharing.

Special topics: directors responsibilities and company filings

Directors must ensure statutory accounts are accurate and Company House filings are up to date. If HMRC is enquiring into director behaviour, ensure your minutes, dividend paperwork and director loan account reconciliations are available.

Read more on directors responsibilities at GOV.UK: Running a limited company: your responsibilities (https://www.gov.uk/running-a-limited-company).

When HMRC asks for historic records or third-party data

HMRC has powers to request historic records and to obtain third-party data. If HMRC requests older records, provide what you can and explain any gaps. Keep a clear log of what was supplied and why anything is missing.

If third-party records are needed, such as supplier statements or bank documentation, instruct your suppliers and bank early, as these can take time to obtain.

What to do if the enquiry becomes contentious or criminal concerns arise

Most compliance checks are civil matters. However, if HMRC raises the possibility of deliberate wrongdoing or fraud, take urgent legal and tax advice.

In these cases:

Do not sign statements without professional advice.
Limit oral communications and request written questions.
Seek specialist legal representation experienced in tax litigation.

Maintaining readiness all year round – a simple action plan

Make compliance a routine activity rather than a crisis response.

Annual action plan:

Monthly bank reconciliations and VAT control checks.
Quarterly payroll audits and P11D reviews where applicable.
Annual review of director loan accounts and dividend paperwork.
Periodic internal audit of business expenses and mileage logs.

For help with ongoing compliance and statutory returns, speak to our Statutory Accounts & Tax team (/services#statutory-accounts-tax).

UK tax and legal accuracy

This article is for informational purposes only and does not constitute professional tax or financial advice. Please speak to a qualified accountant before taking action. This article refers to general principles applicable in the UK and names the tax year 2026/27 where relevant. Always confirm statutory deadlines, thresholds and specific HMRC procedures on GOV.UK or with your adviser.

Frequently asked questions

Q: What should I do first when HMRC opens a compliance check?

A: Read the HMRC letter carefully, note deadlines, log into your HMRC online services account and appoint a lead. Contact your accountant to discuss scope, evidence requirements and whether to authorise them to act for you.

Q: How long does an HMRC compliance check take?

A: Timescales vary by the complexity of the case. Simple checks may conclude in weeks while more complex enquiries can take months. Good organisation, prompt responses and professional representation usually shorten the process.

Q: Which records should I prioritise when gathering documents for an enquiry?

A: Prioritise bank statements and reconciliations, sales and purchase invoices, VAT returns and supporting VAT invoices, payroll RTI reports and statutory accounts. These items commonly form the backbone of HMRC enquiries – often referred to as records for enquiry.

Q: Can HMRC visit my premises without warning?

A: HMRC may make unannounced visits in some circumstances, but many visits are pre-arranged. If an officer arrives without prior notice, ask to see identification and a written explanation of their purpose before assisting.

Q: What is the HMRC soft landing and how can I benefit from it?

A: HMRC soft landing refers to a cooperative approach where proactive disclosure, full records and corrective action may influence how HMRC treats errors. It is not a formal guarantee of leniency but may reduce penalty exposure in appropriate cases. Discuss with your adviser for tailored guidance.

Summary and next steps

HMRC compliance check preparation is about being organised, responsive and professional. Start by confirming the scope of the enquiry, gather the key documents, appoint a single internal lead and instruct a qualified accountant. Use reconciliations and clear working papers to make it easy for HMRC to reach a conclusion.

If you want practical help getting ready, preparing reconciliations or dealing with HMRC directly, book a discovery call with Figures (/). We can support statutory accounts and tax compliance, bookkeeping and Xero (/services#bookkeeping-xero), payroll and PAYE (/services#payroll-paye) and deliver management reporting to prevent future enquiries (/services#management-reporting).

Act early, keep calm and let good records do the talking.