TDS - true that lamndlords with an income of over 25k don't have to register?

Tenancy Deposits

In a bit of a panic as just read the RLA article on AST's in the magazine september/october. Is this true that landlords with rentals worth more than 25K don't have to register the deposits in a scheme? We are in the process of taking a Landlord to court (I am a landlord with three small properties) and my friend just moved from his flat after 18 months - No signed contract with the landlord - and the landlord is refusing to give most/any of the deposit back - he left it in very good condition with obvious wear and tear and stickers on the wall that the previous tenant (whom he knows left) and the landlord NEVER checked him in or out of the property and we since found out he didn't have his deposit in a DPS / TDS - so we have done a letter before action on this score, the landlord is now counter suing for 980.00 worth of listed "damage" - he was prepared to accept £200 - before we started asking questions about the deposit (very nicely I might add).

The landlord has a block of flats which he owns and it looks obvious that his income is more than 25K - we have no contract as my friend never signed a valid one. We don't know if he uses ASTs or not.

Can this "landlord" get away with this if we end up in court? If so why is it smaller property owners that are having to do this - and as I know (to my peril) get stung quite alot by tenants - and bigger ones can get away with just keeping the deposit in a separate account?

Any feedback greatly appreciated - not read anything similar on this website.

thanks