It's a bit of a complex one. On the face of it, the Regulations appear to allow a Penalty Fare to be charged in these circumstances (assuming of course that the operator has provided the prescribed signage as to actually create a Penalty Fares station, which is very unlikely for most stations!). This is due to the definition of "valid ticket" under
Regulations 3(2)(a)(i) and (ii):
any reference to a “valid travel ticket” is a reference to a travel ticket in a person’s possession which is valid for—
(i)the day and time of the journey that person is making, has made or intends to make;
(ii)the train and route used for that journey;
However, this is contradicted by the contents of the NRCoT, specifically 9.5, which states that you will simply be:
charged the difference between the fare that you have paid and the lowest price Ticket that is valid for the train you are using.
It is true that the NRCoT also make reference to Penalty Fares being chargeable in some circumstances but the fact that no reference of Penalty Fares is made in Condition 9.5 makes it clear that the intention is that such a situation is resolved by way of an excess. If there were to be any perceived confusion then, in any case, Section 69 of the Consumer Rights Act 2015 and the general legal presumption against the drafter of an unclear contract, would resolve the contractual issue in the passenger's favour.
One way of interpreting the resultant conflict between train companies' statutory rights (by way of the Regulations) and their contractual rights (by way of the NRCoT) would be to say that Condition 9.5 either serves as permission to board the train without a valid ticket, or that the ticket is not invalid at all, because it is or becomes valid subject to payment of an excess obtainable on the train. Thus a Penalty Fare would not be chargeable either through the definition of "valid ticket" or through the exceptions under
Regulations 6(2)(c) or (d).
Alternatively one could interpret the situation as simply being that, whilst statute law gives the train companies the right to issue a Penalty Fare, and whilst they could in theory do so and ultimately sue the passenger for payment in the County Court, the companies have agreed to foregoe this right under Condition 9.5 and therefore in relation to any Penalty Fare issued, part-payment only in the amount of the relevant excess is required. This would certainly present a (partial) defence in the extremely unlikely event of a County Court claim.
Quite separate from the areas of contractual law and (administrative) statute law, the implications of a train company issuing a Penalty Fare despite having promised not to do so, could be relevant to criminal law in terms of consumer protection law. In particularl, this could be a breach of the ban on unfair commercial practices in
Regulation 3 of the Consumer Protection Against Unfair Trading Regulations 2008.
This could thus lead to the unusual and arguably perverse situation of a train company being given the right by statute law to charge a Penalty Fare, the issuance of which would be a breach of contract and potentially a criminal offence subject to private prosecution!
The revised 2018 Regulations improved many things, but this is one area which brought a significant retrograde step. Unfortunately I wouldn't hold out any hopes of this changing anytime soon - the previous Regulations were made 16 years earlier and it took a sustained period of campaigning by a number of stakeholders in the rail industry for the current Regulations to be made.
And of course, in practice, none of the staff on the front line are likely to give a flying fig about any of this legal wrangling, and so if they are intent on issuing a Penalty Fare then that is exactly what they will do, and the overwhelming majority of recipients of such Penalty Fares will be none the wiser as to what has happened and will simply pay up.