What is the process to change an account in Business Relations from vendor to customer or vice versa?
What is your recommendation?
You cannot, it is a fixed 1:1 relationship. If the BR is a vendor they will have a vendor record, if you need one for a customer you need to create a separate record.
What do i do about their history? if i create a new record i am going to lose history?
Yes, the history will relate to them being a vendor not a customer, or vice a versa.