I feel a tyre slashing spree in swansea coming on./
That's 'dangle berries' James.
Dispute it and demand a court hearing.
present all the evidence, and get the court to summon the buyer as a witness.
(and while you're at it, have a word with the buyer about taking THEM to court for your losses as a result of their failure to tax the vehicle or declare it scrapped or SORN'd )
and ask for costs to be awarded against DVLA for their wasting of the courts time.
and make sure you let DVLA know exactly how this is going to go down, and the name of your solicitor.
go see the C.A.B and enquire about legal aid as well, just in case you can get the government to pay up to defend you against itself.
THEN get the press involved.... accuse DVLA, quite rightly, of wasting the tax payer's money and demand the official auditor investigate.
stick to em James, stick it to em real good.