Pilgrims manager Craig Elliott was hoping to extend the midfielder’s stay and had agreed a deal with parent club Harrogate Town.
However, he says the move fell through on Christmas Eve when Town asked for further stipulations to be added to the deal, which led to the former Sunderland player joining York City instead.
“It was all agreed and then things have happened, to do with insurance,” Elliott said.
“It happened too late for me to do anything about it on Christmas Eve.
“Everything was agreed and you think it was going to carry on as it was.
“It’s not great for me or Liam. Liam wanted to stay and he was gutted.”
Elliott didn’t wish to elaborate upon the caveats added to Agnew’s move.
Harrogate’s change of tact could have been swung by Jordan Thewlis’s recent loan spell at Boston, which saw him injured on his debut and ruled out of action for up to four months.
Agnew, who has had three spells at Boston, made his York debut off the bench during their 5-1 Boxing day defeat at Darlington.