Readers' forum : Watching out

My client has a cash-rich limited company that offers marketing services to medical professionals. Most of his clients are in the US so he is not registered for VAT. However he has an idea that if the company bought and sold antique watches this would earn a decent return. My questions relate to VAT as follows.

Would the income from selling the watches be classed as ‘investment’ rather than ‘business’ so that the sales could be ignored as far as the registration threshold is concerned? He already has about £75 000 of annual UK fees from his marketing work. If possible he would not want to register for VAT because his clients as suppliers of exempt medical services cannot claim input tax.

If the income was included as taxable sales would it be sensible to form a separate company for the watch...