Well took it to the dealers bodyshop today and the warranty manager confirmed that this was becoming a common problem with mkv's and that he would put in a claim and based on previous experience would most likely get sweet FA. Then he said he would put the claim in via the service department and try and get goodwill, he reckoned 50/50 was as good as it was likely to get - maybe 75/25 at the very most.
Apparantly VW know of this and believe its due to the wheel arch liner rubbing on the metal panel inside and out of sight, and thats where the rust starts. VW class this as 'mechanical damage' therefore they don't cover it under the 12 year anti perforation warranty but under the normal 3 year warranty - even though as the guy said himself, its rust at the end of the day