I used to work within a field that was very much concerned with VAT in the UK so forgive me if the information may not be technically correct for Irish legislation but I believe the principals may be the same.
If a business decided to split part of its operation in order to avoid reaching the threashold required to register for VAT then it was subject to a 'Artificial Separation' investigation. This investigation would determine the following: Why did the business, whether it is a sole trader, partnership, Ltd company, split the level of income received - what was their explanation? VAT investigators would also look at factors such as the registered business premises and establish the following: Who pays the utility bills, who pays the rent, who employs the staff, who pays the staff costs such as PAYE, NI contributions etc, is it a fair and reasonable split between the businesses for costs etc, do the two different separate business entities have similar/common trading activities, do they share customers/suppliers/bank accounts/accountants?. If the VAT inspector believed that the business was artifically separted then an assessment would be issued with the relevant penalties and potential further charges for fraudulent evasion of VAT with possible court action.
As I said, this is based on the UK revenue action but I believe that the Irish revenue may take a similar view on possible deliberate artifical separation?