EDIT: Sorry - it's a bit Looooooong!
Now then, I've been thinking about this for a while - trying to understand where the legislators were coming from. It all comes down to safety, in the end - with a wee bit of identity chucked in for consumer protection.
The way I see the background of it (and why we aren't likely to see the back of this legislation before the fall of the EU) goes like this:
Type Approval was introduced Europe-wide (it's EU legislation) in the 70s to protect car buyer's safety. Over the years new regulations have been added as technology and the car-buying-public's expectations with regard to safety grew.
The Type Approval regulations mean that if - for example - you have a 1985 Cavalier, then from looking at the identity of the car, you know it compied with the safety regulations in force at the time it was manufactured. As long as it's in good condition (which is where the MOT comes in), it can be considered safe. Not as safe as a modern car, but by buying a 25-year-old car you make that choice and you know what sort of safety standards you're buying into.
The trouble is, that if you change the car from the manufacturer's specifications, Type Approval can no longer guarantee that the car is safe. After all, if the hero of our hypothetical story happens to have cut a structurally crucial part of the bodyshell of the Cavalier in order to fit that Jag V12, the car might be in good condition (it could pass an MOT, since the MOT isn't looking at the engineering of the modifications) but it is no longer safe.
As the car no longer complies to the type approval for the Cavalier, it can no longer be regarded as being an Cavalier (since all Cavaliers comply to the TA, if this one doesn't comply to the TA, it's no longer a Cavalier). As the vehicle type is in question, the identity of the car is called into question - it's registered as a 1985 Cavalier, but can no longer be regarded as such - thus removing the right to the 1985 Cavalier logbook.
The other side to the loss of identity - which applies to cars not type-approved originally as well as those that were - is the issue of buyer protection. If you buy a 1985 Cavalier (or a 1960 Austin A40) then the average man in the street* would expect it to be as safe as a 1985 Cavalier (or a '60 A40). However, that can no longer be proven by it's identity since it's been modified since. In order to prevent a foolish person from expecting the car to be as safe as a 1985 Cavalier the original 1985 identity needs to be removed.
Since the car no longer has an identity, it can be regarded as a new, un-registered car. Under the TA legislation, in order to register that new, un-registered car, it needs to comply to Type Approval.
Type Approval is a horrendously complex and expensive procedure that the manufacturer of a car has to pay for. The cost and requirements of TA are way out of range of a man-in-a-shed, leaving our hero's 'Cavalier' langushing on a trailer on it's way to the RR gathering.
TA legislation allows countried to introduce their own method of bypassing the legislation in certain cases - imports, radically altered, amateur-built etc. This is where the SVA, and latterly the IVA, come into play. Passing an SVA or an IVA gives the car a Minister's Approval Certificate - consider it to be Type Approval Lite
TM. An MAC allows the new, un-registered 'Cavalier' to be registered, either with an age-related plate or a Q plate, depending on the circumstances - in this case it's most likely to be a Q plate.
The SVA/bIVA covers the major points of the Type Approval reqirements, but at a significantly lower level, and with a much lower requirement for documentary proof. For example, Type Approval probably requires independant testing done to ensure that the petrol tank on a car won't dissolve in petrol, while the bIVA merely requires that the tank be made of metal.
The bIVA also inspects the structure of a car in order to asses it's strength and crash-worthiness, highlighting the weakness where the 'Cav' was chopped to fit the V12. The inspection avoids the need to crash-test our hero's Pride and Joy, which would otherwise be a Type Approval requirement.
The central questions that the above labyrinth revolves around are the following:
Recommendations
• To consider when a vehicle ceases to be the original vehicle.
• To consider whether vehicles which have been radically altered from their original specification, require type approval. This may involve changes to legislation.
This is where it gets messy - the UK has had to develop it's own system within the TA legislation to identify those cars required to take an IVA. The result is the unholy mess that is the points system, which left grey areas regarding what constituted a modified monocoque.
The DVLA statement clarifying the law regarding modified monocoques (and modified chassis) means that we now understand that it's altering the structure of a car that is the issue, rather than modification
per se. This means that our hero now knows what he can and can't legally do to his car, and what the requirements are if he steps over that line.
Seriously chopping about a bulkhead in order to fit a bigger engine will significantly affect the strength of the car - thus removing it's Type Approval, etc., etc. WRT to the tunnel issue, if you follow the letter of the (un-clarified) ponits system then your car will be eligible for a bIVA. The 'per-car' basis was purely due to the lack of clear guidance - you would have had a postcode lottery whereby one DVLA office would pass your car while another would shred your V5C. I'd rather know what the test had in store for me without having to find out beforehand whether Reg at DVLA Neasden is off on holiday tomorrow or whether he's just been made bankrupt and had a divorce.
While I agree that IVA-ing every car with an engine and 'box swap that requires some relieving seems excessive, that is the fault of the legislation, not ACE or the DVLA's interpretation of it. I also agree that it's madness that you can fit a V8 to a completley standard Morris Minor legally**, while a sensibly-modified version might not be legal seems insane. However, the legislators only considered the identity of the vehicle, and if you only change the engine it's still the same car.
The fact that people have been getting away with it for years is - as has been commented - due to the difficulty of tracking every car's details throughout the years. Despite this, AFAIK there were a few blatant cases that were caught - like tax-exempt-registered Land Rover Defenders. However, the advance of computer technology, and the computerised MOT in particular, means that tracking details of every car is now much easier.
I don't wish to scaremonger, but it seems possible that DVLA/VOSA might start craking down. If that is the case, I'd rather know I'm on the right side of the law rather than either being ignorant of the law or deliberately breaking the law. I do agree, however, that there could be major issue were they to crack down - there are huge numbers of modified cars out there that probably should be put through an IVA. Maybe the amnesty - or issue of a Z-plate after a shortened test that just covers the main structure and brake balance etc. - might be sensible for those already in existance.
If we accept that the EU legislation is here to stay , then we need to know what it means for us. ACE is doing fantastic work to make sure that we know where we stand with regard to this legislation. Don't shoot the messenger!
If you have a real problem with the system, then work with it while fighting it on the political front. I wish you all the luck in the world.
James
*The average man in the street is considered to know nothing about any particular subject - I.e. knows about as much about cars as Gordon Brown.
**Arguably you could be prosecuted for driving an unsafe vehicle under the construction and use regulations if you drove a V8-engined drum-braked Minor on the road.
P.s. Kudos if you've read all of it...
Bolt on tunnel, not part of the chassis... LOL! 
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