Not at all stupid, because VAT can then be reclaimed on all fuel purchases, maintenance etc , also a massive amount of money.
That benefit is also illusory but in a less direct way.
The benefit is present if the amount reclaimed on purchases is at least as great as the amount invoiced to the renters.
But if that is true, it implies that the business is constantly cash-negative (taking the simple assumption of all transactions being subject to VAT, which is not quite so e.g. insurance) and that means that by the time capital allowances are properly introduced, it will definitely make a constant and sizeable tax loss.
And then Inland Revenue will get interested.
There is no problem with a business making a constant loss, until the proprietor is found to have a hobby which is aligned with the business activity....
One way is for the plane to be owned by one's main business (if one has a main proper business e.g. manufacturing some stuff) and then it becomes just another business asset, with VAT reclaim working normally. But BIK is an issue there too, of course. I know of very high hour pilots who do 100% of their flying on business and it works fine for them, but not many private pilots are in that position. An awful lot of corporate jets are operated in this way, but they are not (ostensibly) used privately.
Another approach is to reach an agreement with HMRC prior to starting the aircraft operation. The worst they can do is say NO but in practice they are likely to agree to some apportioning.
I have found the Inland Revenue to be total in-your-face blatent crooks, but have found Customs & Excise to be totally proper, and I have had loads of VAT inspections over the years. Which is curious since C&E have much greater powers!