I have 2 options for my companies – how could Amazon ruin them?

Apologies for the super long post!

My wife and I own 2 micro ecommerce companies that sell different products on 2 different accounts. Both started as very separate entities with different locations and a different employee/location but as we had so many problems with one business, we moved it to the same location/employee as the other one.

Then, a couple of months ago we had a scare from Amazon giving us a huge VAT bill for both companies as they suspected either we weren’t UK established for VAT purposes (we moved abroad) or they suspected VAT disaggregation, they wouldn’t tell us their exact reasoning. That was resolved as it happened just a week after we moved so we could provide past/different rental contracts/employee info.

However, in researching this amazon issue, we found that the move was a bad idea as it now poses the risk of possible VAT disaggregation. To avoid any future issues, we have the option to 1) enrol both companies for VAT or 2) sell 1 company to the other and merge them into one VAT registered company.

My question is, what could I not know about that Amazon could have potential issues with in either scenario? The last issue, had it not been resolved, would have bankrupted both businesses. When sorting that out I read so many horror stories about Amazon ruining small businesses.

And can anyone offer any advice on the logistics of either option please? For example:

1) If company A buys company B, company B no longer exists but we would keep it as it is – it would simply be a trading name under company A. But could I keep the old amazon account for company B or would I have to close it and then re-upload all listings to company A’s amazon account? Company B currently has A+ content and is trademarked so would we lose that? Or can the now merged company A effectively hold 2x amazon accounts but with different trading names?

2) If we keep the companies separate, does this limit us in any way? For example, could we sell similar products on both in the future? Or would they need to be very separate?

I’d greatly appreciate any advice on how Amazon could find problems with either scenario please.