You don't seem to have made reps in the form required:
Representations against the enforcement notice
5.—(1) The recipient may make representations against the enforcement notice to the enforcement authority which served it on the recipient.
(2) The representations must be—
(a)made in the form determined by the enforcement authority, and
(b)to either or both of the following effects—
(i)that in relation to the alleged contravention, one or more of the grounds specified in paragraph (4) apply;
(ii)that, whether or not any of those grounds apply, there are compelling reasons why, in the particular circumstances of the case, the enforcement authority should cancel the penalty charge and refund any sum paid to it on account of the penalty charge.
(3) In determining the form for making representations, the enforcement authority must act through the joint committee.
(4) The grounds mentioned in paragraph (2)(b)(i) are—
(a)the alleged contravention did not occur;
(b)the recipient—
(i)never was the owner of the vehicle in question,
(ii)had ceased to be its owner before the alleged contravention occurred, or
(iii)became its owner after the alleged contravention occurred;
(c)at the time that the alleged contravention occurred, the vehicle in question was in the control of a person who did not have the consent of the owner;
(d)the recipient is a vehicle-hire firm and—
(i)the vehicle in question was at the material time hired from that firm under a hiring agreement, and
(ii)the person hiring it had signed a statement of liability acknowledging their liability in respect of any penalty charge notice served in respect of any relevant road traffic contravention involving the vehicle during the currency of the hiring agreement;
(e)the penalty charge exceeded the amount applicable in the circumstances of the case;
(f)there has been a procedural impropriety on the part of the enforcement authority;
(g)the order which is alleged to have been contravened in relation to the vehicle concerned, except where it is an order to which Part 6 of Schedule 9 to the RTRA 1984 applies, is invalid;
See what others say.
If you believe what's in your letter, why are you concerned about the discount? Simply don't pay, wait for an Order for Recovery, tick the box that you made reps but did not receive a Notice of Rejection, wait to see what the authority do - they have the options of throwing in the towel or referring to the adjudicator who would then issue directions to you to demonstrate that you made reps.