Citizenship - Issues with Name discrepancy

[Zeu1]

Hello,
I am writing as I think I might have a problem when I applied for my British Citizenship.
My first application for the naturalisation failed as I could not provide proof of English knowledge.

My old passport for my home country was expired so I demanded a letter from the embassy and travelled to my home country where I acquired a new passport.
Now they issued the old passport they omitted my middle name as it was on my birth certificate. So here in the UK, I have established everything in the name.
But now my new passport has my new middle name as it is in my passport.
So I was wondering if this will cause a problem for my application for British citizenship? I have done a quick Google search and found that I need to fill a form to request for a new residence biometric card (think I will have to pay £230 for that service).
SO I was wondering if I really have to do this since I noticed in section 1.5 and 1.6 that I could tell them why my name is different.
I just don't want to lose money again
Thanks