The group I am a member of, formed a limited company in 1993 for the specific purpose of claiming back VAT on the initial aircraft purchase and also to limit group members personal liability in the event of accident etc. The arrangement also has the benefit that the group are able to reclaim VAT on all fuel purchases , repairs, maintenance and all other vatable expenditure on the aircraft . The disadvantage of course is needing to charge VAT on group invoices, but assuming that the group is non profit making, then it is an entirely revenue neutral operation. In 14 years of current limited Vat registered company operation ( and 5 years in a separate company before that, also set up for the same reasons ) we have had 5 changes of aircraft reclaiming VAT where it was applicable on the aircraft purchase and only ever had one ( entirely innocuous) visit from the Vatman. Of course, when you come to sell the aircraft again, you need to charge Vat on the sale price.
Given that many groups like ours seek limited liability protection, then VAT registration is entirely feasible and desirable and I don't see any problem with the concept at all.
Mike