115Duty to give notice that adjustment has rendered reduction too largeU.K.
(1)This section applies if—
(a)the amount of any of a person's income is reduced under section 112(1),
(b)that reduction (“the original reduction”) later becomes excessive as a result of an adjustment of the amount of any tax payable under the law of a territory outside the United Kingdom or an increase under section 112(3), and
(c)the adjustment or increase is not a Lloyd's adjustment.
(2)This section also applies if—
(a)a deduction is allowed under section 113(2) in the case of a person making a disposal, and
(b)that deduction (“the original reduction”) later becomes excessive as a result of an adjustment of the amount of any tax payable under the law of a territory outside the United Kingdom.
(3)The person must give notice that the original reduction has become excessive as a result of the making of an adjustment or increase.
(4)Notice under subsection (3) is to be given—
(a)to an officer of Revenue and Customs, and
(b)within one year from when the adjustment or increase was made.
(5)If the person fails to comply with the requirements imposed by subsections (3) and (4), the person is liable to a penalty not greater than the amount given by—
where—
A is the amount of tax payable by the person for the reduction period after giving effect to the reduction that ought to be made under section 112(1) or (as the case may be) under section 113(2), and
B is the amount that would have been the tax payable by the person for that period after giving effect instead to the original reduction.
(6)In subsection (5) “the reduction period” means the tax year, or accounting period of a company for corporation tax purposes, for which the original reduction was made.
(7)For the purposes of subsection (1)(c), the adjustment or increase is a “Lloyd's adjustment” if the consequences of the adjustment or increase in relation to the reduction are to be given effect in accordance with regulations under—
(a)section 182(1) of FA 1993 (regulations about individual members of Lloyd's), or
(b)section 229 of FA 1994 (regulations relating to corporate members of Lloyd's).
(8)In subsection (2) “disposal” has the same meaning as in TCGA 1992 (see, in particular, section 21(2) and the following provisions of TCGA 1992).
(9)In this section so far as it relates to capital gains tax “notice” means notice in writing.