Update:
Car was towed to a VW garage near my works on Thursday. The RAC bloke who collected it was an ex VW technicican and knows VW's inside out, he said he had never heard of this failure and couldn't believe how much I knew on the subject!
Anyway I got a phone call off VW on Friday (after I'd had a skin full of ale on my Xmas do!) I listened to the voicemail they left....
"Even though you have an extended warranty I have to authorise the initial diagnostics which is 4 hours labour, total of £450
"
Not a good start, I rang them back on Saturday and was told someone would be in touch but I've not heard anything yet.
If I pay the £450 will I be able to claim it back?