While flying at approximately 150 feet agl on an instructional power line inspection, the instructor closed the throttle to simulate engine failure. The student turned towards a suitable paddock and commenced a practice forced landing. When it was assessed that the forced landing would have been successful the student was instructed to go-around. There was a minor delay in applying power during which time the aircraft continued to descend. The instructor then took control of the aircraft. The aircraft started to slowly gain altitude but due to the up sloping terrain and trees at the end of the paddock, the aircraft's rear fuselage collided with the trees. The instructor then closed the throttle and the aircraft settled into the trees. The student was a CPL holder and he had completed several low level forced landing practices. During these practices the student had always completed the go-around without difficulty. This fact influenced the instructor into allowing the practice forced landing to proceed to a lower level than would have been the case if the student had demonstrated some difficulty with the go-around. This expectancy that the student would perform the go-around without difficulty probably led to the instructor being slow to take over control of the aircraft in the very short time available to prevent the accident. The student was taken by surprise by the initiation of the practice engine failure. When a practice forced landing is started from 150 feet the whole exercise is compressed into a short time frame. This short time frame plus the additional work load from the practice emergency would have increased the workload on the student to a high level. The student believed that he heard the first command to go-around and started to increase the power, albeit slowly, but this is not supported by either the instructor or the passenger. The student was concentrating on successfully completing the forced landing practice and it is likely that a combination of channelised attention and high workload was responsible for the pilot not hearing the first command to go-around.