Has the V5 changed? It used to identify the registered keeper of the vehicle, and not the owner. IE the person responsible for taxing, mot, parking and speeding fines etc. They used to state that they were not proof of ownership.
IF it is a scam, I would suggest it is someone trying to clone a stolen car for sale, as it would have some form of address relating to the person applying, and therefore traceable if used in crime.
Phone the DVLA via their phone number on the website, NOT the letter. It could also simply be a scam to obtain your details, as analogue methods of identity fraud is generally small and forgotten.
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