YouCo can pay for any expenses it likes. The only question is, does that money, when paid over to you personally, represent a Benefit in Kind to you: if it does, then you pay tax on it just like it was normal income. (In other words, if it's not a business expense, you must pay for personal costs out of taxed income.)
The test for a business expense is "Did I spend this money
wholly and exclusively in the course of my work?" If you did, then it's a business expense, YourCo picks up the bill and the cost comes off your profit calculation. Travelling to do a job for someone is clearly a business cost, as is lunch while you're there and as is a hotel bill if you get stuck overnight. However, if you stay overnight so you can go visit some friends or something while you're there, then it's not wholly and exclusively for business purposes and is not claimable.
VAT, FRS or not, is neither here nor there. But be aware that if you incur expenses that you can charge to your client, they are part of your service and you should add VAT to the total amount.
Your old accountant sounds like he's in the wrong job. Speak to your new one and get the full story: there are around 60 things you can legitimately claim as business expenses and some of the dividing lines, like training, are a bit blurry.
(BTW, just commented on this point on my blog. I'll be doing a more detilaed version sometime soon. Plug plug...
