working at EMA I've heard our Radar/App controllers talk to GA A/C with Mode Charlie inaccurancies talk about the Mode C tolerance being required to be within 300' of actual altitude
Not strictly true. I can't recall the accuracy requirement for transponder altitude reporting but the 300ft that you've heard relates to the ability of a controller to accept variations in the reported level of an aircraft for separation purposes. These variations result from a wide variety factors including transponder/encoding altimeters becoming less accurate between maintenance and pilots/autopilots not flying at the precise level assigned. The relevant ICAO book, PANS-ATM, says:
8.5.5.2 DETERMINATION OF LEVEL OCCUPANCY
8.5.5.2.1 The criterion which shall be used to determine that a specific level is occupied by an aircraft shall be ±60 m (±200 ft) in RVSM airspace. In other airspace, it shall be ±90 m (±300 ft), except that the appropriate ATS authority may specify a smaller criterion, but not less than ±60 m (±200 ft), if this is found to be more practical.
8.5.5.2.2 Aircraft maintaining a level. An aircraft is considered to be maintaining its assigned level as long as the pressure-altitude-derived level information indicates that it is within the appropriate tolerances of the assigned level, as specified in 8.5.5.2.1.
8.5.5.2.3 Aircraft vacating a level. An aircraft cleared to leave a level is considered to have commenced its manoeuvre and vacated the previously occupied level when the pressure-altitude-derived level information indicates a change of more than 90 m (300 ft) in the anticipated direction from its previously assigned level.
8.5.5.2.4 Aircraft passing a level in climb or descent. An aircraft in climb or descent is considered to have crossed a level when the pressure-altitude-derived level information indicates that it has passed this level in the required direction by more than 90 m (300 ft).
8.5.5.2.5 Aircraft reaching a level. An aircraft is considered to have reached the level to which it has been cleared when the elapsed time of three display updates, three sensor updates or 15 seconds, whichever is the greater, has passed since the pressure-altitude-derived level information has indicated that it is within the appropriate tolerances of the assigned level, as
specified in 8.5.5.2.1.
8.5.5.2.6 Intervention by a controller shall only be required if differences in level information between that displayed to the controller and that used for control purposes are in excess of the values stated above.
It's not correct either to suggest that 'transmitted altitude and actual altitude to differ significantly'. Maybe I'm being a bit pedantic but a transponder that is working properly will always report a flight level - and the reported level will correctly reflect the FL equivalent of the aircraft's altitude. As has already been mentioned, ATC radar systems usually convert the FL reported by an aircraft to the equivalent altitude when the aircraft is below the transition altitude.