I need head room in my basement and want to take down the old cold air return metal duct work 12x 8 and re-route to the plenum with 12"flex duct. Will this be a problem with the furnace working properly? Please advise

Flex duct is the last thing you should use.. it is highly restrictive compaired to rigid ducting. Besides possibly being in violations of code somepolaces (no I don't know the building codes).

The 12" size is correct. Make sure you install a duct rated for return air use, reinforced to withstand the negative pressure of a return air situation.