The phrase is informal and best used in casual conversation, not in formal settings like business meetings or academic papers. I knew when the shit hit the fan at the party, it would become legendary gossip.
Pro Tip 2/3
Potential Offense
Be cautious as 'shit' is a swear word and the phrase might be considered vulgar or offensive by some. I was careful not to say 'when the shit hits the fan' in front of my grandparents.
Pro Tip 3/3
Crisis Point
Use the phrase when a situation drastically deteriorates, and its negative impact becomes obvious to everyone. He kept ignoring the warnings until the shit hit the fan and he lost everything.