"Is this legal?"
Depends. It's not illegal to request money, but whether they can make you pay is another matter. A private parking company is trying to get you to admit you broke a contract with them because you did not comply with their terms. (Technically, if your blue badge wasn't correctly displayed, they have a point.) However, it is not a criminal matter and you are not being fined.
The usual advice is to visit www.pepipoo.com and see what people are saying there. The website has a search facility and you can search for UKCPS. Their general advice is to ignore what is technically a speculative invoice, but to be prepared to argue your case if the matter comes to court (which would most likely be a small claims court). In practice, there seem to be remarkably few (if any) court cases and these companies seem to thrive on making empty threats.
Your call, I think.
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