I don't think this is particularly different from many of the sorry stories on this site, but will share in case it is of help/interest.
I was sending a parcel (ebay sale - a boardgame worth £20) from Scotland to England. After it not moving for over 3 weeks, raised a support ticket with Hermes. The next day they said it was lost and pointed me at their claims form.
Filled in the claim form (on 28th Sep) and on 27th Oct Hermes updated asking for proof of value etc. However, they didn't send a notification to me, so I didn't discover this until I logged in on 27/10 to chase them.
Provided the required info, but they now state that as I didn't reply within 14 days, I've broken their T&Cs.
As an aside, I do wonder if not sending you a notification email is a deliberate business practice so that they can then invoke their "14 days" rule to try to avoid liability.
I replied stating that their 14 day rule was irrelevant and gave them 14 days before I started the small claims (as it's in Scotland, The Simple Procedure). No reply (in fact, they marked the ticket as resolved - looks like this was done by an automated process).
So, I just submitted the SImple Procedure process online. It was very straightforward and cost £19. The only tricky bit was there's a statement around interest, but Citizens Advice suggested you could say you want the sheriff to "apply interest at the judicial rate".
Thanks for all the advice and stories on this forum - it helped me understand they really are just a bunch of unethical chancers trying to scare you off.
I'll provide updates once things have slowly moved forward.