Taxi Company

Client has a taxi company which is VAT registered

Part of the company rents taxi's to drivers - which obviously attracts VAT.   As the drivers are not VAT registered this makes the rentals very expensive, or the company loses money on each car

Would it be an option to set up a separate company that owns the cars and rents them to the drivers, who then do work for the other company

I'm just trying to find a solution to help the company out as at the moment it's a bit catch 22