Section 113 — Effect of replacement notice of underpayment

(1) This section applies where a notice of underpayment is withdrawn under section 111 and a replacement notice is given in accordance with section 112.

(2) If an appeal has been made under section 110 in respect of the original notice and the appeal has not been withdrawn or finally determined before the time when that notice is withdrawn—

(a) that appeal (“the earlier appeal”) has effect after that time as if it had been made in respect of the replacement notice, and

(b) the person given the notice may exercise the right of appeal under that section in respect of the replacement notice only if the earlier appeal is withdrawn.

(3) If a sum was paid by or recovered from the person by way of penalty under the original notice—

(a) an amount equal to that sum (or, if more than one, the total of those sums) is to be treated as having been paid in respect of the penalty imposed by the replacement notice, and

(b) any amount by which that sum (or total) exceeds the amount of the penalty imposed by the replacement notice must be repaid to the person with interest at the appropriate rate running from the date when the sum (or, if more than one, the first of them) was paid or recovered.

(4) In subsection (3)(b) “the appropriate rate” means the rate that, on the date mentioned in that provision, was specified in section 17 of the Judgments Act 1838.