Its one of those things that probably wouldn't be flagged immediately but at some point in the future a bot will likely pick it up and accuse you both of having a second account linked by the address. Then you have to prove a negative that you don't have two accounts and proving the negative is awkward as others have experienced.

If its to be a formal subletting it would be advisable to subdivide the space and put a lease in place. If yours is unit 2 then call the subdivided space unit 2A which would also become the legal address of your friends ltd company. You'll have no problems with Amazon accounts then but there are plenty of other considerations such as the fees involved to do that and how that affects yours/their business rates etc.

I think you will mostly be okay but if your friend's account get suspended then it is likely to be linked to your account will get suspended. Also the opposite applies if your account gets suspended your friend's account is likely to get suspended.

You may want your friend to initially set up their business at a home address and ensure they can get verified to sell on Amazon then move their address over to your business address.

I agree with the other poster to have a formal lease agreement. So if there are issues you can show to Amazon that the company is not associated to you and just lease space in your premises.