I would also report this to the police.
Did you pay full whack for your ticket or at a cost less than the face value?
There's two pieces of railway related law they could try and prosecute you under. There's the railway bylaws and the Regulation of the Railways Act (RORA). The main difference is that the Bylaws are 'strict liability' - if you don't have a valid ticket, you can be found guilty, regardless of the reason. For a RORA prosecution the train company (TOC) would need to prove intent to avoid a fare. The Bylaws do not create a criminal record in the conventional sense - they don't appear on DBS checks - but they still need declaring for a year. RORA convictions have higher fines and do appear on DBS checks; again the norm would be that they are spent after a year.
If you paid at the full price, then it'd be hard for the TOC to prove intent to avoid a fare. If you paid less than the face value however then I suspect that they could make a case against you. Also note that in writing to you, the TOC is looking to gather evidence against you for these prosecutions. This includes the possibility that you might be the originator of the fraudulent ticket - which is why I'd suggest reporting this to the police, to try and remove any suspicion that you made the ticket.
How exactly to respond to the letter depends on the full details as to what happened. As others have said it would really help to know the train company, type of ticket, time of day, how long you'd been using it, details of any conversations and boarding station for us to advise you properly.
Finally - if you think that a conviction might impact on your work I'd strongly advise talking to a union rep confidentially as soon as possible.