Be Audit-Ready: What HMRC Wants to See in Your Corporation Tax Records?

Running a limited company comes with many responsibilities. One of the most important is keeping the right records for corporation tax. HMRC can check these at any time. If your records are not in order, it can lead to fines, extra tax bills, or even an investigation.

Being audit-ready does not have to be stressful. If you know what HMRC is looking for, and you keep your paperwork tidy, you can stay safe and focused on growing your business.

In this blog, we will explain what HMRC expects to see in your corporation tax records, how long to keep them, and how to make sure everything is ready in case of an audit.

What Are Corporation Tax Records?

These are the records that support the information you give on your Company Tax Return. HMRC uses them to check if your company is paying the right amount of tax.

What Does HMRC Expect to See?

Here’s what you should keep, according to HMRC:

1. Company Income

• • Invoices issued to clients or customers

    • Bank statements showing incoming payments

    • Records of other business income (e.g. interest, grants)

2. Company Spending

• • Receipts for business expenses

    • Purchase invoices from suppliers

    • Petty cash records

    • Credit card statements if used for business

3. Employee Records

• • Payroll reports

    • PAYE filings

    • National Insurance contributions

    • Staff expenses and reimbursements

4. VAT Records (if VAT-registered)

• • VAT returns

    • VAT invoices

    • Proof of input and output VAT

5. Business Assets

• • Records of items bought to use in the business (e.g. laptops, tools)

    • Depreciation records

    • Proof of asset sales or disposals

6. Loan or Finance Agreements

• • Any documents related to business loans

    • Interest paid

    • Repayment plans

7. Accounting Records

• • Balance sheets

    • Profit and loss accounts

    • Journals and ledgers

    • Trial balance

8. Company Structure

• • Shareholder records

    • Director information

    • Company registration details

9. Tax Calculations

• • Detailed workings behind your tax return

    • Evidence to support deductions and reliefs

    • Capital allowance claims

How Long Should You Keep Corporation Tax Records?

HMRC requires businesses to keep corporation tax records for at least 6 years after the end of the accounting period.

In some cases, you may need to keep them longer:

• If the return is late

• If an enquiry is open

• If the company has bought or sold assets

Keeping records for 7 years is a safe rule.

What Format Should the Records Be In?

• You can keep records on paper, digitally, or use software

• The key is that they are complete, accurate, and easy to access

• If HMRC asks for them, you must be able to show them quickly

Digital records are becoming the standard. Cloud accounting software like Nomi helps make sure everything is backed up and audit-ready.

What Happens If Your Records Are Not Good Enough?

If your records are missing or not detailed, HMRC can:

• Estimate your profits and tax bill

• Fine you for failing to keep proper records

• Charge interest on unpaid tax

• Open a more in-depth audit of your business

• Delay repayments you may be due

Tips to Stay Audit-Ready

To keep HMRC happy and reduce risk:

• Use accounting software like Nomi to track income and expenses

• Scan receipts and upload them straight away

• Reconcile your accounts regularly

• Do monthly checks on your bookkeeping

• Avoid cash where possible; use bank or card for clear tracking

• Train staff to follow proper record-keeping steps

• Work with an accountant who understands corporation tax rules

• Keep backup copies of digital files just in case

• Update your records whenever something changes in the business

Common Mistakes to Avoid

Many small businesses make these errors:

• Losing receipts

• Forgetting to record staff expenses

• Mixing personal and business spending

• Guessing figures for tax returns

• Not backing up digital records

• Not tracking mileage or travel costs

• Missing bank interest income

Avoid these and you’ll be one step ahead.

Can HMRC Audit Any Business?

Yes, HMRC can audit any company at any time. They don’t need a reason, although they often focus on:

• Businesses with sudden profit changes

• Companies with inconsistent returns

• Sectors where cash use is high

• Random spot checks

So even if you’ve done nothing wrong, you could still get picked. That’s why it’s best to stay audit-ready at all times.

What Should You Do If You Get Audited?

If HMRC contacts you for a compliance check:

• Don’t panic – it does not always mean something is wrong

• Respond quickly – delays can make things worse

• Check your records before sending anything

• Speak to your accountant for support

• Be honest if you made a mistake – HMRC may reduce penalties

• Keep copies of all communication

Being well-organised makes audits much easier to deal with.

How Nomi Can Help You Stay Audit-Ready?

At Nomi, we make staying compliant with HMRC simple. Our cloud-based accounting software is built for UK businesses.

Here’s how Nomi supports you:

• Easy expense tracking – snap a photo of a receipt and upload

• Live bank feeds – stay up to date with your transactions

• Automatic reports – generate profit, loss, and tax figures

• Secure cloud storage – access your records from anywhere

• Reminders and alerts – never miss a deadline

• Built-in payroll – keep employee records tidy

• Accountant access – share info with your advisor in one click

We follow HMRC’s rules so you don’t have to stress. Whether you’re a sole director or growing fast, we’ve got you covered.

Conclusion

Being ready for an HMRC audit means keeping clear and accurate records. It’s not just about avoiding fines – it’s about knowing your business inside out.

With the right tools and a bit of discipline, you can make record-keeping part of your normal routine. And if HMRC comes knocking, you’ll be confident, calm, and ready.

Don’t leave it to chance. Stay audit-ready the easy way with Nomi.