My client is an expert in fighting computer fraud. He has his own company with 10 staff. In order to get new business, he entertains existing and potential clients lavishly. Many of these people are told by their employers not to accept entertainment to a value exceeding say £1000 per day. If they do, they must refund the excess to my client out of their own pockets. When they do this, my client never banks the cheque. It has been suggested that this income is taxable in the company. Is this correct? Are there any VAT angles?