UK Construction and Law

A misaddressed notice was still served and the energy audit penalty stands at 28,687.50 pounds

By Staff Writer  |  3 September 2026

Two energy audit appeals were decided on the same day. One cut a penalty by three percentage points. The other failed on a headcount that a company said the pandemic had inflated. Neither escaped the scheme, and both turned on paperwork that arrived at the right postcode.

The First-tier Tribunal gave two decisions on the Energy Savings Opportunity Scheme Regulations 2014 on 2 September 2026. Both were appeals against enforcement by the Environment Agency. Both failed on the central point, and the reasoning in each is more useful to a large contractor or developer than the outcome.

In the first, Azenta UK Limited v Environment Agency [2026] UKFTT 01260 (GRC), a civil penalty notice of 30 July 2025 imposed 29,700 pounds for failing to carry out an energy audit contrary to Chapter 3 of Part 4 of the Regulations. The appeal was allowed in part. The notice was affirmed with the penalty reduced to 28,687.50 pounds.

The service argument, and why it failed

The appellant argued that the compliance notice, the enforcement notice and three earlier awareness letters had never been properly served, so the penalty notice was wrong in law. The address used carried the county Lancashire, which was wrong, and omitted the name of the industrial park. The company name, the road and the postcode were correct.

The tribunal held that the awareness letters were not required by the Regulations at all, so their service was a matter of common law, under which a properly directed letter proved to have been posted is presumed to have arrived. An assertion of non-receipt does not rebut that presumption. On the formal notices, the tribunal held that the errors would not have influenced delivery, and that the enforcement notice had in any event been received by an employee.

It does not suffice to rebut the presumption of effective service that the letters did not come to the attention of a director or the company secretary.

Judge Saward, First-tier Tribunal, General Regulatory Chamber

Post addressed to the director or the company secretary that lands on an administrator's desk and stays there has still been served. The tribunal recorded evidence that there was no log of incoming post and no database recording receipt.

How the figure moved

The penalty available for failing to carry out an audit is an initial penalty of 50,000 pounds, or such lesser amount as the compliance body determines, plus a daily penalty of up to 500 pounds for each working day the breach continues, capped at 80 working days. The tribunal found the Agency had correctly applied its own enforcement and sanctions policy by taking an initial penalty amount of 45,000 pounds, applying a multiplier of 0.3 to give a starting point of 13,500 pounds, and setting a range of 6,300 pounds to 33,750 pounds.

The Agency had discounted the top of that range by 12 per cent for the one mitigating factor it found, producing 29,700 pounds. The tribunal identified one further mitigating factor, the appellant's attitude, which it described as lax for the most part while noting that the need to comply had never been disputed. It increased the discount to 15 per cent. Fifteen per cent off 33,750 pounds is 28,687.50 pounds. Everything else in the calculation was upheld.

The second decision, and the headcount trap

In Milsom Hotels Limited v The Environment Agency [2026] UKFTT 01258 (GRC), decided without a hearing, the appeal was dismissed and the enforcement notice affirmed in its original terms. The company argued that at the compliance deadline it neither employed more than 250 people nor had turnover above 44 million pounds, and that it had not appreciated that the threshold is assessed retrospectively at the qualification date of 31 December 2022.

It also argued that its 2022 staffing had been inflated by pandemic operating requirements. Its accounts for the year to March 2021 showed 213 employees. The following year showed 288. Applying paragraph 11 of Schedule 1 to the Regulations, the tribunal held that the company remained a large undertaking by reference to its March 2019 and March 2020 accounts, and that the March 2022 accounts were not to be disregarded in favour of the headcount on the qualification date itself.

The company said it had a small administration and finance department of three to four people and no time to monitor guidance. That did not assist. No notification of compliance was submitted by the extended deadline of 6 August 2024, and that was the breach.

Both decisions were signed on 27 August 2026 and given on 2 September. Read together they say the same thing twice. The threshold is worked out from filed accounts on a date that has already passed, and the notices that follow are served when they are posted to the registered office, whatever happens to them after that.