Hopefully you are still in time to lodge an appeal with the tribunal, so do it ASAP - no brainer if it's now at the full penalty anyway. You have the original delay (you need the feedback from DVLA - in the other recent case, Southampton said they had applied within the window, but there was no record at DVLA, which rather undermines their case...) plus now they appear to have overstepped the mark in hiking the charge.