If the guy hasn't put it through his books your evidence could put him in big trouble.
When my local garage do stuff for cash i ask them just to write a list on a blank piece of paper with the prices on for my records, that way they don't have to worry about a false invoice emblazoned with their logo and details. Could be why they are holding back?
If there was never any agreement that they were to do it for cash to get you a better price then i would screw them over as it sounds like they were just trying to make more profit. Trading standards would work and they pass it over to the VAT man if necessary.
