THE hundreds of North-East businessmen and women who see the new Premiership football season as one of the key perks of their business should be aware that the taxman is taking a keener than ever interest in their sporting hobbies.

All of the North-East's big three soccer teams rely on corporate entertaining as a major source of revenue and hundreds of local businesses have their own boxes or blocks of seats.

But Jim Meakin, tax partner at Grant Thornton in Newcastle who admits to being partial to the odd invitation to St James' Park, says: "Many businesses use corporate entertaining as a means to attract and retain clients.

"What many don't realise however is that it is not viewed as an allowable business expense as far as corporation tax is concerned," he continued. "And, since the sums of money involved can be high, Inland Revenue is taking a keen interest in the add-backs shown in the corporation tax paperwork."

Businesses now need to be increasingly vigilant as the Revenue has introduced operation SORTED (Special Operation Reviewing Targeted Entertainment Data).

"The Revenue is now using routine PAYE audits to gain access to the customer records of corporate hospitality providers, and then using the information to check that appropriate adjustments have been made for entertainment expenditure in the customer's corporation tax," he said.

"This way the Revenue can obtain the information from source rather than relying on analyses provided with the businesses records."

Mr Meakin advises businesses to be vigorous about keeping track of hospitality expenditure.

"Faced with the corporation tax self assessment penalties for an incorrect tax return, which can amount to fines of up to 100 per cent of the tax at stake, it is essential that companies keep accurate records of all entertainment expenditure," he explained.

"Make sure that it is all collated and added back when the return figures are prepared. Problems invariably arise where expenditure is recorded under a variety of different expense codes."

"The initiative highlights the Revenue's continuing strategy to develop ways to increase the tax take and extract penalties from wrong-doers. The simple message is to make sure that your records pick up all the relevant entertaining expenses and to ensure they are all added back.