HMRC has a regime of inspections that run along similar lines to VAT inspections. As a small business owner, it is better to work on the assumption that you will be visited at some time, and it is important that records are well kept, all invoices and receipts are properly filed and there are no grounds for criticism.
If evidence of dishonesty is found, the inspector will wish to review accounts for earlier years, and may choose to reopen the directors’ personal tax assessments, charging interest and penalties on any unpaid tax.
Remember that HMRC hold extensive information about you, and indeed they have developed new software that collects onto one database all the information they would need in connection with any investigation.
You could either be targeted, in which case you will probably have an idea of why this is happening, or you may be selected at random. Unfortunately HMRC consider small businesses easy prey.
To minimise the risk of an adverse outcome, you should have considered the following issues before any HMRC contact: