Get your MP involved.
Considering the sums of money, and the fact they required 600 quid within 14 days, and even then you get nothing, it would be criminal if done by any small or large company.
Certainly appears too 'harsh' if the first application was rejected on not answering a (to you, non-existant) mail message.
If your MP has ever had a single e-mail 'not arrive' they should surely feel for you about the 300 let alone the extra 600 pounds.
I assume the UKBA visitor comes without appointment so there is no chance of 'warning' any illegally employed person (or am I just being overly suspicious - you are, after all, wanting to do things 'right').
However, what if you had not been there ?
No doubt that would have been "your problem" and they would have come back at some unannounced date in the future, oblivious to your actual needs.
I feel for you, and while I can understand (to a small degree) why the UKBA might act in certain ways, it is especially bad that where you are trying to keep your business running and meet certain exacting requirements to be able to employ some non-EU nationals, and the Government has to match public concern for illegal immigrants etc, you're trying to do the right thing while the hurdles put in your way seem to be excessive (why 2 weeks? why did they not send you a reminder e-mail rather than just put your 300 pounds in their coffers and suggest no refund, no appeal?)
The (current) Government may not be entirely responsible for this, so if your MP is in opposition, consider going higher, to the Business and Industry section of the Govt. where someone like Mark Prisk (who has an interest in small business, among other things).
Since the current Government has a commitment to reducing "red tape" and could hardly promote "fleecing" a business in these tough economic times, going down the Business / "economic stimulus" route to highlight the problem may be your best course.
If you closed down (worst case) - how many people would be affected, how many suppliers would be affected, how many customers would be affected. I don't expect those answers, but they are worth using as reasons for 1200 pounds not to be spent "for nothing".
Presumably the UKBA visitor could have gone away and used some computer software to apply appropriate sections to do an "Action Plan" in 2-4 hours. Even at 25 pounds an hour, 100 pounds could cover his/her time without being an exceptional burden on you.
I'd suggest 600 pounds is the sort of figure that is out of the question for a small business to absorb, and to be given only 2 weeks is another degree of unreasonableness, and since they have now done a U-turn, tell the Minister the funds demanded were under false pretences and should be refunded within 14 days!