Neilz

I use Chrome, I hate Internet Explorer with a passion!

Firefox, but I'd be happy with any so long as AdBlock was installed. The web is a horrible place without it.

More Euro rubbish, nowhere else on earth needs this stupid rule, only idiots with too much power and too little to do, based in Brussels.
Then those that make these rules wonder why people don't like them, idiots!

Time to cut and walk away.. tell them you are now too busy to take the work, I would never reduce a deposit, I set a deposit to make sure I am paid for any work they could call to cancel, I make a point of telling them that once work has started its non refundable if they cancel.

They do sound like a "hassle" client - the red flags seem to be there already.
 
Walk away, move on...

Just tell them you have no desire to work with them after they've messed you about. Or make an excuse and say another project has landed or you've moved a future project forward and their 'slot' is now gone if you don't want to be blunt. To be honest, from what you've said it sounds like getting rid of them now will spare you a lot of hassle in future.
 
Anyone who won't sign a contract or pay a deposit would be ringing alarm bells in my head.