If you deregister you leave the scheme the day before your deregistration date. You must account for output tax on your final VAT return for:
sales made on the last day of registration (which must be accounted for outside of the scheme)
the value of any capital expenditure goods or any pre-registration stock, on which you recovered input tax at the time of registration and which are still on hand at the date of deregistration.
I've highlighted pre-registration. I wouldn't say this advice is overly clear but it seems, as you say, that they haven't reclaimed any input tax.
Their own pre-registration date was a few years before the introduction of VAT, and in any case, i don't think they'll have any bell-bottoms or mini skirts left.
