The First-tier Tribunal (General Regulatory Chamber) allowed the appeal of ITH Group Limited against a civil penalty notice issued by the Environment Agency on 4 November 2025, substituting a penalty of £16,875 in place of the original £33,750. The decision, handed down on 21 May 2026, carries significant implications for how regulators approach the application of aggravating and mitigating factors in penalty calculations under the Energy Savings Opportunity Scheme (ESOS) Regulations 2014.
ITH Group, a parent company in the healthcare sector, had failed to carry out an energy audit as required under Chapter 3 of Part 4 of the ESOS Regulations. The company maintained throughout proceedings that it received no correspondence from the Environment Agency prior to 6 August 2025, when a revised notice of intent to impose a civil penalty finally arrived.
The tribunal, comprising Judge Swaney, Member Mitchener and Member Booth, heard evidence from ITH Group’s Chief Commercial Officer and Operations and Facilities Manager, both of whom were found to be credible witnesses. Despite this, the panel declined to find that non-receipt had been established on the balance of probabilities. Drawing on the Court of Appeal’s guidance in R (Alam) v SSHD [2020] EWCA Civ 1527, the tribunal confirmed that the presumption of service under section 7 of the Interpretation Act 1978 will not be displaced by an absence of actual awareness alone. ITH Group had neither investigated with its auditors, RPGCC, why forwarded post may have gone astray, nor conducted any internal inquiry into the fate of the missing correspondence.
On the penalty calculation, the tribunal accepted the Environment Agency’s four-step approach and agreed that a negligent culpability finding was appropriate. ITH Group had no system in place to identify ESOS as a relevant regulatory obligation, notwithstanding the company’s evidence that it operated robust compliance frameworks across its wider business.
The critical finding concerned step four of the penalty process, where the Agency had treated the absence of any response to the compliance notice and enforcement notice as an aggravating factor. The tribunal rejected this reasoning. Where witnesses were accepted as credible in their assertion that no person with appropriate authority had actual knowledge of those notices, it was not reasonable to characterise that silence as aggravating conduct. The tribunal also dismissed as an aggravating factor the lack of representations in response to the notice of intent, finding it relevant only to the refusal to waive the penalty, not to its quantum.
The ongoing failure to comply between receipt of the notice of intent on 6 August 2025 and the issue of the civil penalty notice was, however, treated as genuinely aggravating. ITH Group had taken no meaningful steps toward compliance in the three months available to it, and neither witness could confirm when the company had first engaged the third party that ultimately conducted its ESOS assessment in December 2025.
The tribunal consequently concluded that imposing the maximum penalty within the applicable range of £6,300 to £33,750 was unreasonable, and substituted a figure of £16,875, payable within six weeks of the issue of a revised penalty notice.
The decision underscores the limits of relying on inaction as an aggravating factor where actual knowledge of enforcement correspondence has not been established, whilst reaffirming that responsible undertakings cannot rely on ignorance of statutory obligations as a basis for relief.
