The problem I have is not so much that people selling paperwork are technically doing so illegally (although I wouldn't be comfortable doing that), but that it enables other serious crime like ringing of stolen classic cars. I think I get particularly tetchy about this because of my history in the Land Rover scene, where this sort of thing is common place and the theft of such vehicles is (was?) a serious issue for owners.
If you had a stash of spitfire parts and used it to build a car, if you still had the VIN plate (or even just the number) you could legitimately apply for an identity from the DVLA.