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This going to need proper signage images, GSV is 2008 so not helpful. It looks like the 2 card parks blend into each other so this probably hinges on how clearly signed the 2 car parks are.

On the face of it the PCN is POFA complaint and you're dealing with Smart Parking who are IPC members, both of which means even with a good case around signage being inadequate it's unlikely an initial appeal of IAS appeal will be successful.

If you're prepared to put up with the debt collectors letters and eventually enter a defence when they lodge a court claim you will probably avoid paying the PCN as they will most likely discontinue before court. Do you want to play the long game?

The whole industry works from entry and exit photos, that isn't an avenue of appeal except in very specific circumstances.

As for the driver being adamant they didn't go near the Red Lion, if you look at the overview picture on Google maps you'll see you drive through the Red Lion car park to enter Duxford hotel car park. This is why I said signage and the quality of it is important, how clear is the dividing line is between the car parks. It's also possible Smart's cameras failed to clock the driver exiting the Red Lion car park re-entering later, unlikely to miss both but not impossible.

I doubt the Red Lion will cancel it, its probably a bit of a cash cow for SMART parking and the Red Lion probably wants their spaces protecting from hotel guests.

On the face of it you don't have any obvious grounds for appeal unless you can show the signage is poor, which it may well be. You can run this down if you really don't want to pay, doesn't really matter what your appeal grounds are in this case, it'll probably be rejected as will the subsequent appeal to IAS. You just need to go through the motions. Debt collectors letters will follow which can be ignored, followed ultimately by a letter of claim to kick off legal proceedings. You will need to engage with that process or risk a default judgment against you. If you do defend the claim they will most likely drop it before it goes to court.

So weather the storm for the next 6 months or if you want it to go away now you'll need to pay, your choice.