Why are you so reluctant to amend your Return?
If you force HMRC into an enquiry, then penalties based on the PLR (Potential Lost Revenue) will be chargeable. The PLR will be based on the capital loss that you are otherwise carrying forward to set-off against future gains (when in fact, those losses should be used against this gain). Given that HMRC have requested that you amend your Return, refusal would also constitute a deliberate action, meaning no chance of suspending penalties.
They make take the view that you are attempting to evade (rather than avoid) tax which is a criminal charge. This will also give them a 20 year window.
So I'll re-ask, why are you reluctant to amend the Return when you are not going to suffer an additional tax liability?
Presumably because the window for amending his return expired on 31 January 2017, meaning the law does not allow him to do it?
HMRC cannot amend his return under s28A because they have not opened a valid enquiry. The OP is correct that the so called decision is not a formal notice under s28A.
HMRC can make an assessment under s29. They will assess the gain without giving any losses. On appeal, either the gain will be nil (if PPR is due), or losses will be utlised to reduce the gain to nil.
If there is a gain, the PLR will be 10% of the losses that were utilised.
Failure to co-operate in 2017 does not mean that the inaccuracy was deliberate when the return was submitted in 2015. But is is a factor in determining the reductions for disclosure.