The Government always wins.  See the case below for an exceptionally harsh (on first read) penalty.  However, rules are rules.  The penalty represents only a small proportion of the actual profit the appellant made and with that sort of money,

I have said on many occasions that any decision by HMRC is worth appealing. There are so many circumstances where the HMRC have been proven to be incorrect at the appeal stage but the option of appealing is rarely exercised.