Taxation (International and Other Provisions) Act 2010 section 115

Duty to give notice that adjustment has rendered reduction too large

Section 115 requires a person to notify HMRC when a previously claimed deduction for foreign tax (taken against income or capital gains instead of as a tax credit) becomes excessive due to a later adjustment in the foreign tax liability.

• Where a person has reduced their income or deducted foreign tax from a capital gain, and a subsequent change in the foreign tax payable makes that original reduction too large, the person must notify HMRC.
• Notice must be given in writing (for capital gains tax purposes) to an officer of Revenue and Customs within one year of the adjustment being made.
• Failure to give the required notice within the time limit can result in a penalty of up to the difference between the UK tax that should have been payable (based on the correct, lower reduction) and the UK tax that was actually calculated using the original, now excessive, reduction.
• A specific exception applies where the adjustment relates to Lloyd's underwriting business and is dealt with under separate Lloyd's regulations.