Taxfree childcare eligibility stopped due to wife's employer - appeal or submit new application?

After two months with not tax free childcare government payments we received a message from the government saying we are not eligible because my wife is still claiming childcare vouchers through her employer. 

Turns out that when my wife asked her employer to stop childcare vouchers they didnt cancel them they reduced the amount to zero. So we havent had vouchers but technically still signed up to the scheme which means we werent ever eligible. 

The gov have said we can appeal the decision or make a new application for tax free childcare. To appeal you need to send a letter (by post!) - a successful appeal would be the better outcome but I dont want to waste my time if its a non starter. Any advice?

Januray 2015
CC - £2100 NOW £1222
CC - £1006 NOW £890
LOAN - £2100 NOW £0.00
OD £810 NOW £0.00
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