The problem is them calling it a "cut-n-shut" when they produce no evidence to prove that it is.
I suspect its made from at least three stolen cars (2x M3s + one estate car).
The only potential danger is from the estate body not being rated / strengthened to take the M3 torque.
It would still have had the problems that come with building a car from stolen parts, but it would have been perfectly possible to get an IVA for that car and make it legal (
https://www.gov.uk/vehicle-approval/individual-vehicle-approval).
The authorities wanted to prove a point - and they have done. I'm not sure it's the point they wanted to make, though, as they just come across as vindictive idiots.
The best solution would be licenced breakers and proceeds to the Exchequer. The scroats could even buy their cars back if they wanted (but in a thousand parts)