A couple were told they were not allowed to drive their car because records showed it had been scrapped, despite it sitting on their driveway.
Anthony Gorman and Elizabeth Imber said the Driver and Vehicle Licensing Agency (DVLA) told them their Volkswagen Polo no longer legally existed.
They said they were unable to get the car re-registered despite contacting the DVLA over a three-week period.
The DVLA said it had spoken to Mr Gorman and resolved the matter.
Mr Gorman and Ms Imber, from Tilehurst in Reading, checked the status of the car in February because their monthly direct debits for the vehicle tax had stopped.
They said they were told the DVLA had received a certificate of destruction from a scrappage firm in Yorkshire, which they had never been in contact with.
Ms Imber said the couple were unable to sell or scrap the car because it did "not exist in the eyes of the law".
Mr Gorman said he had to spend £200 a week on a hire car after the DVLA told him the Polo should not be driven as it could not be legally taxed or insured.
He said he called the scrappage firm and was "totally stunned" when they told him the car had been destroyed and they still had parts of it on their premises.
"I was on the phone to them - the people who allegedly destroyed the car and took it to pieces - and went to the front door, looked out and saw the car was still there," he added.
After being contacted by the BBC, the DVLA said it had received its information about the car "from authorised disposals facilities".
"We have only acted on the information we have received and we are in touch with Mr Gorman," it added.