As part of my route to becoming a QHI I did the business plan thing which with the VAT rules at the time meant being able to reclaim VAT on training including PPL and hour building plus AFI course.
The pre-trading claim period was six months then (1998) I had to be careful when I registered for VAT. It helped with "business" cash flow and reduced the amount required to be borrowed. However....the point is I had to convince HMC that I would be self-employed and that I would be in the position of repaying it in the future. I went in person with my plan....over the phone
exaplanations don't always do you justice particularly when saying I want to a ATPL.
If you subsequently found yourself working for a North Sea operator for example in a salaried position they would ask for the VAT and possibly interest on the reclamed VAT in full. They periodically checked with me to find out when I would commence trading and paying them VAT!
IR 35 has not (touch wood) affected the self employed instrutor/pilot community to my knowledge yet. We are simply sole traders. VAT is obviously now charged and added to my monthly invoice which in turn HMC get returned to them every quarter. Ideally you have an accountant to help make tax affairs run smoothly and you never ever fail to pay the VAT on time.
Hope some of this may help!