freeholder wants ridiculous amount to register tenancy agreement

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A while ago I asked about the freeholder wanting £120+VAT to register a notice (which I drafted, not them) that as leasehold owner, I had rented the property on an AST. The lease says a "reasonable fee." After advice from the helpdesk I got back to them and threatened to challenge it in LVT and also saying that £120+VAT did not at all reflect their costs for doing this. They have come back to me, returning my cheque for £20, saying that I cannot challenge this in a LVT because "a notice of underletting fee is not an administration charge for the purposes of Schedule 11 of the Commonhold and Leasehold Reform Act 2002, and therefore LVT does not have power to decide whether such a fee is reasonable." and referred to various LVT decisions to that effect, including MAN/00CG/LAC/2008/2004/005 and LON/00BA/LAC/2009/004. Please can you tell me:
1 What is the best course of action for me to take now, please?
2 What action can they take if I send them less or don't pay?
Thanks