AudioQueueStart fails with -16981 from background process on iOS 7

In my iOS app on all previous versions of the OS, we record audio occasionally, then sleep for a while, then record again, and cycle for ever (sleep is to maintain battery).  This worked fine up to iOS 7, even when the app was in background.  Now, when the app is in the background the call to AudioQueueStart fails to start recording with an error: -16981.  I can't seem to find this error code in the documentation or on the Web, and if I turn it into an NSError, it says "The operation couldn’t be completed. (OSStatus error -16981.)", which isn't all that helpful.
I have a theory that Apple are closing a hole here; the idea being; why would you want to start recording from a background process, unless you are spying?  Well, with the users consent (signed and paid for!), that's exactly what we are doing.
So; can anyone confirm or deny that this is expected, or what I might be able to do about it.  It's a bit of a killer for our app.  I have filed it as a bug with Apple, and will try to report progress here.
UPDATE: 3rd October 2013
Although the previous answer seemed to work for this for a while; it has stopped working now with -12985, which is because another app has turned on audio.  This is of course why I need to use the mixing flag.
UPDATE:
iOS 7.0.3 (and later) seem to have fixed this issue completely.

After playing with different audio session properties, I found that -16981 error takes place when kAudioSessionProperty_OverrideCategoryMixWithOthers is enabled (TRUE). As soon, as I set it to '0', AudioQueueStart() executes successfully. So, before starting the audio session try:
UInt32 allowMixing = 0;
status = AudioSessionSetProperty (
kAudioSessionProperty_OverrideCategoryMixWithOthers,
sizeof (allowMixing),
&allowMixing);

Clearly, this is behavior change in iOS 7. As it was mentioned before, the documentation does not list -16981 error code.