I would agree that it can look like this to an outsider. I run a Ltd with employees and have been worried about keeping them in work and paying their salaries. There is also an important difference - if I buy lunch for myself when I am traveling to viisit a client then that is a legitimate, tax deductible business expense as it is a cost incurred for me to do my job - just like HMRC and many companies allow their employees to incur costs when away from the office.
Entertainment of clients - so a nice lunch is not a legitimate business expense so VAT is not recoverable, and cannot be used to offset company profits either.