Taking Paypal to the Small Claims Court, possible?

In short yes you can claim in the county court (otherwise refered to as small claims court) for anything upto £100,000 i beleive but certainly you can claim for more than your account balance.

the easiest way is to use the onlione service moneyclaim online which is the official uk courts website. I think your claim will cost in the region of £65 - £100 which will be added to the amount being claimed from paypal.

your situation is not unusual paypal routinely freeze accounts and refuse to explain why other than to give a vague statement that you are "high risk".

points to remember are that you are legal owner of the funds, your agreement with paypal can be ended at any time by you and if you disagree with paypal's reason, or lack of, for holding your funds you have the right to take action to recover any money you feel is outstanding.

paypal can't wriggle out of court action because they are based in luxembourg as they are accountable here in the uk for their business dealings here and have offices in surrey where any court/enforcement action can be effected.

if you feel you have just cause and want to persue action then you can do so by yourself or there is a specialist company based in the uk who deal with these claims for you for a fee, not sure how much but i have heard good things about them in other forums, their website is here.

good luck with it and yes, i have had experience of this myself which is why i know a little (not an expert though) about it, they froze £3,500 of my money a couple of years ago and i made a claim after being refused access to my funds, after serving court papers paypal released my money despite being adamant that they would not do so no matter what i did so there is always hope, good luck hope some of the above was useful.