Validity of S21 notice after and annual rent payment

Possession - Section 8 and Section 21

I let a house on a one year AST with the full year's rent paid in advance because the tenant had an industrial injuries award and wanted to pay in advance.

The AST says:
Term: 1 year commencing 14th February 2008
Rent: £6000.00 per year
Payable: in advance commencing 14th February 2008

A section 21 notice for possession expiring after 13/2/09 (A) was served on the tenant when they took occupation (but before the deposit was registered with the DPS, the tenants were given written notice that it would be protected with the DPS before they handed over the deposit and it was protected within the 14 day limit)

In February this year I verbally agreed an extension of the tenancy with monthly rent payments. Very quickly it became apparent that they were not capable of paying the rent - I have struggled on with them - including pushing them into getting debt advice from the CAB and the CAB coming to me with an agreed payment plan. I agreed it verbally subject to them being absolutely strict about keeping up the payment schedule. They very quickly reneged. They are now three months in arrears.

The "push" to get them to the CAB was a section 21 served on the tenant on 18th May 2009 (B) with two month's (plus) notice for possession to expire after 15/8/9.

Today I was just about to go to court with my Accelerated Procedure papers and £150 court fee when I realised the AST was written in terms of a "rent per year". Hence these questions:

1) is the S21 expiring after 15/8/9 (B) valid?
2) can I rely on the first section 21 that expired after 13/2/9 (A) even after verbally agreeing they could stay?
3) if the tenant were to challenge the first, fixed term S21 (A) would they therefore be confirming that they were now on a monthly period so that my second S21 (B) would be valid?
4) if I write all this up, much as it is here, and submit that to the court along with copies of both S21's would the court look at my case favourably?
5) should I just forget S21 and go to a S8 procedure instead?

Any other possibilities? I am aware that the tenant is going to the local authority seeking emergency housing and the LA is demanding sight of the paperwork that is to cause them to be homeless. Is the LA likely to spot the potential for delay and avail itself of that or will they just take the 2 month S21 (B) at face value?

Many thanks for your help