Judging from what you have said about the original amount owed, them asking for settlements, and then admitting that the amount they want is wrong, it sounds like it could be fraud to me, although I'm no expert. However, it does prove they don't know what they are doing.(posted 7683 days ago)Offer them 5% of the £10K i.e. 500 quid. If they refuse it, ask them to take you to court for it.
Tracey