A business is either registered for VAT or not registered for VAT. A business cannot have some activities registered and some not.
Similarly, the VAT threshold (2017-18 £85,000) cannot be avoided by artificially splitting a business into separate parts and arguing each part is under the threshold.
However it can be possible for two people to own several businesses and treat each one separately for VAT purposes. A recent VAT Tribunal had to decide whether two hairdressing businesses should be treated as a single business for the purposes of VAT registration. HMRC were arguing there was just one business and its aggregated turnover exceeded the VAT threshold.
The distinction was critical as the two separate businesses were operating below the registration limit (currently £85,000) and the combined operation would have exceeded the limit meaning that VAT would need to be charged.
In this recent case it was established that the two owners did indeed have two separate businesses. They had never intended to run a single business in partnership. There was also physical separation of the premises, separate of clientele, different stylists worked for each salon and separate books were kept.
The taxpayers won the case and did not have to register for VAT