@mdann52 I would drop points 1 and 2, as they're unnecessarily self-incriminating (and you don't want to make the council's case for them) and the comparison to London is incorrect. I would go with something much simpler and to the point:
Dear Bristol City Council,
I challenge liability on the ground that no road user charge or penalty charge is payable under the charging scheme. In any event the penalty demanded on the face of the notice exceeds the amount due by law, this is because regulation 7(3)(f) does not allow the council to demand any amount over and above the penalty charge.
It follows that the penalty must be cancelled.
Yours faithfully,
Send this online and keep a screenshot of the confirmation page.