Rebuilding a write-off

Its quite common for something that is not to be returned to the road for the VIN plates to be removed and any stamped or pressed VIN within the vehicle structure to be erased by chasing through it with a cold chisel / grinder

It sounds bent as to me. I've never seen an insurance company request numbers to be removed but leave the shell in one piece.

I have physically destroyed the head stock of an alloy frame whilst their representative watched to prevent it being used again.

If the roof had been removed or the shell cut in half it would make more sense. I would say the id has already been used to make a ringer. I bet if you could find the original reg it would have been on the road long after that shell was supposedly written off.
Check the remaining glass for an etching of the registration number.

Also for a built up vehicle registration you are supposed to be able to price the identity of where parts have come from?

I know of a few people who have had difficulty getting a V5 for project cars and restoration projects recently since DVLA have been awkward about issuing them for vehicles that have been off the road for some time
I heard one story about someone spending vast amounts of money to restore an unregistered car which DVLA then refused to issue one for , potentially leaving them £00000’s out of pocket, although I’ve no proof of this or whether it’s just another urban myth
If it was me and I was that keen on using the car you’ve been offered I think I’d be going the IVA route. I’d add that it’s many years since I last got a ‘Q’ plate

There was a chap on the Oldskoolford forum who had this happen on a Mk1 Escort he restored.
 
He'd had it for years laid up, lost the document and restored the car. 
When he had the car inspected to get the document DVLA didn't believe that it was the same car so declined the application thus making it a track car only.
However,  the car had been extensively modified with bubble arches, tubbed inner arches, boxed 4-link, roll cage etc. I suspect this may have been part of the issue.
I don't know if he ever got it sorted out, it was a pity as it was a lovely car.

I actually could have a similar issue, I bought a Mk1 Escort back in around '96 which I never put on the road, however it was registered in my name.
I lost the document in a house move around 2002 and recently decided to get stuck in and sort it out, so thought it would be prudent to contact the DVLA regarding a replacement document.
They requested photos of the car, reg plates etc and when they replied they told me that they would not issue a document as the car was not road worthy and to contact them when it was completed so an inspection could be carried out.
I do hope I don't end up in the same situation as the aforementioned chap but as the car will not be modified to any major extent I think it will be alright.

Apologies for going off on a bit of a tangent.

All that helpful info and you take the huff?

Even as a rolling shell it should retain enough points to keep it's identity anyway.