Sorry to hear of the issue.
There is a well known company in Germany which pursues these claims and I think it's the same one who has written to you.
If you do a Google search you may see that other customers have come to this site for the very same issue (regarding the company you mention).
The issue would be that you are in the UK and they are in an EU country (Germany) so pursuing you would be a lot of trouble for them - they may instead send you numerous threatening letters to try and get you to pay them - some customers have ignored them (they have not come back to this site to my knowledge, saying they are now being sued) and others have made offers to the company.
The issue would bet if you took down the image and as a claimant they would have to prove some form of "loss" due to your conduct which in my view would be difficult to do. I am not sure if they have your full name and address - they need this in order to pursue you in any court action.
The two legal jurisdictions are also entirely different - the only issue could potentially be if they engaged a UK law firm to pursue you and sued you in the UK. Until then, the firm is likely to continue writing to you to scare you in to paying.
You could reply to them though they will try their utmost to persuade you to pay them, whether that's the full sum or a lower amount is up to them and whether you pay is up to you - it is to do with copyright breach so if you use an image belonging to someone else, they have a prima facie case against you though as I say, there are problems for them with the fact you are in the UK and the claim would be a small claims case (where legal costs are not recoverable in the UK).
Here are a couple of links to show you the issue :
1. Click Here
2. Click Here
3. Click Here