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@Puncheur
Happened to a mate of mine last year and I used to work as a lawyer so I called the old bill for them and asked a few questions. She'd bought the wrong ticket and then lied to the inspectors about her journey. They found her out, she admitted it and then was threatened with prosecution.
Basically, not paying a fare is not itself a criminal offence. This covers people who, in good faith, buy a ticket that doesn't cover their entire journey.
Where it becomes a criminal offence is when the person knowingly evades a fare. People usually unwittingly reveal their knowledge that they should have paid to the inspectors when they are asked why the fare hasn't been paid. An answer such as "forgot to swipe my oyster" or "I was going to swipe it later" will mean that you fall into the catagory of 'might be prosecuted'.
To prosecute someone with a clean criminal record and for a first fare dodge is within their power but extremely heavy handed. They apparently usually only reserve prosecutions for persistent dodgers - generally the people who come on the tubes to beg or pickpocket.
It might seem like a minor offence but in essence its actually classified as a crime of 'dishonesty', therefore it will be flagged up and may cause problems if you want a career in the law, accountancy or you want to emigrate. Doesn't necessarily make these things impossible but it can make it more difficult than normal.