Did you want the avios and taxes/fees/charges actually refunded? If so you could have done that with £35 cancellation fee deducted.

You can get an FTV for virtually anything you book through BA, so the email seems to be complete garbage as far as I can see. I would call up to check, if your FTV is fine then just keep if for use in the future. If they claim still you can't have one then just cancel as normal as above.