Bigendbob... I take a different view. Flying clubs are their for PPL and IMC (IR(IR(R) only, it is only normal for qualified PPL's if they have the means to buy their own aircraft or form a syndicate.
In my early days as an instructor, I did renewals on PPLs own aircraft and group aircraft, I never came across a syndicate with more than eight members.
The bottom line here is that as an instructor, why would you turn down the opportunity to revalidate someone on a Rockwell 114, Piper Turbo Arrow, it beats flying a Cessna.
To add I moved away from 'Flying Clubs' concentrating on training aircraft owners and flying groups, it is so much rewarding.
The issue of VAT is not an issue, it is clearly down to the HMRC and turnover.