HMRC’s Project Snowball: what to expect and how to prepare
What is Project Snowball?
Project Snowball is the internal name used by HMRC for its intervention, formally titled “VAT / Corporate Tax / Employment Duty Systems and Processes”. It is a new audit-led programme for large businesses, designed to assess tax-related systems and processes.
It is a cross-tax, systems-focused approach, primarily led by non-tax specialists and does not include tax technical analysis. Where specialist tax knowledge is needed, tax specialists are brought in to support the audit.
Project Snowball is focused on how a business’s tax-related systems and processes operate across VAT, Corporation Tax, Employment Taxes, Customs and other relevant tax areas.
Historically, visits by HMRC to businesses were framed around the accuracy and completeness of specific tax returns, for example, VAT or corporation tax returns. By contrast, this focuses primarily on systems and processes, in line with other HMRC governance initiatives. The project demonstrates HMRC’s increasing focus on governance and having appropriate systems, processes and controls in place to manage tax risk.
What are the objectives of Project Snowball?
The objective is for HMRC to gain a detailed understanding regarding how businesses in specific complex sectors manage their tax, while also providing education to that business regarding HMRC’s systems and process expectations.
Which businesses does Project Snowball apply to?
It is expected that Project Snowball will apply to UK businesses that fall within HMRC’s Large Business Directorate ie those that have an assigned Customer Compliance Manager (CCM).
Initially, HMRC will focus on specific sectors, beginning with automotive, insurance and retail. These have been chosen because of their size, complexity and varied operations. The programme is expected to expand into more sectors in the future.
Six businesses had visits from HMRC under Project Snowball in the year to March 2026, with about the same expected in 2026/27.
Businesses are identified using internal data, and the CCM must agree that they are an appropriate business at an appropriate time. The programme is voluntary, but lack of engagement may be an additional factor in the context in which HMRC assesses the risk profile of the business.
HMRC’s approach to Project Snowball: what businesses can expect
HMRC’s approach is to schedule a visit that lasts around one to three days, allowing a detailed review of a business’s tax systems and processes.
The objectives of each visit include:
- Understanding how the customer’s tax-related systems operate in practice.
- Designing and implementing a specific control testing programme.
- Identifying weaknesses or risks in processes and controls.
- Providing educational feedback to help customers strengthen their governance.
- Passing on any identified tax-specific risks to HMRC tax specialists.
- Gaining a more detailed view of the customer.
What happens after an HMRC Project Snowball visit?
Following the visit, HMRC will issue a report containing observations and recommendations for improvement. Any tax-specific risks identified during the process will be referred internally to HMRC tax specialists for further review.
Preparing for HMRC tax systems reviews: key steps for businesses
Businesses should be prepared to discuss and demonstrate the effectiveness of their tax-related systems, including how data flows into tax returns and what processes and controls are in place. We’d recommend that you familiarise yourself with HMRC’s Guidelines for Compliance, which outline what HMRC considers to be good practice.
We’d also recommend undertaking a review of tax-related systems and processes ahead of the HMRC visit and identifying any systems, processes and control gaps and addressing them.
How we can help
We help businesses understand what HMRC means by systems and processes by mapping tax processes and highlighting key controls and risks. This gives clarity on how the tax environment operates and where improvements may be needed ahead of a Project Snowball review.
Our dedicated tax risk and governance team frequently works with large businesses to help them understand HMRC expectations. Our team contains specialists from across all areas of tax, allowing us to take a broad, systems focused approach. We also work closely with risk and compliance teams, process design teams and internal auditors – either from our own internal teams or the business’s own – to help bridge the gap between tax and risk teams.
If you’d like to learn more about Project Snowball and how to prepare, contact Flora Barnes or your usual RSM contact.