The letter Patino received was being played down by the Foreign Office this morning, but it does mention the Diplomatic and Consular Premises Act 1987, which allows the government to revoke diplomatic status of an embassy on UK soil. (politics.co.uk)
And here is something rather more sensible than Mr Hague compromising the security of our own diplomatic staff abroad from Carl Gardner at his Head of Legal blog: Julian Assange: Can the UK withdraw diplomatic status from the Ecuadorian Embassy (charonqc.wordpress.com)
You go ahead, revoke diplomatic status and international recognition of Vatican sovereignty and impose taxation on church holdings. (religion.blogs.cnn.com)