977 Recovery of capital gains tax from shareholder

Summary

This section authorises the recovery from shareholders of the capital gains tax charged on a company in respect of the disposal of assets. The section applies where the company has made a capital distribution out of the proceeds of the disposal and has not paid the capital gains tax charged in respect of the gain on the disposal.

Section 614 provides for a similar provision to this in the case of a company chargeable to corporation tax in respect of a chargeable gain.

Details

Definition

(1) “capital distribution” has the meaning set out in section 583.

Application

(2) This section applies where a person connected with an Irish resident company receives or is entitled to receive a capital distribution deriving from, or consisting of, a disposal on which a chargeable gain arises to a company. The section does not apply where the capital distribution represents a reduction in share capital.

Recovery of tax from shareholder

(3) Where the capital gains tax due by a company is not paid within 6 months of it becoming due, the connected person may be assessed, in the name of the company, within 2 years of that date to an amount of tax not exceeding —

• the capital distribution which that person has received or became entitled to receive, and
• that person’s proportionate share of the tax on the gain, at the rate in force when the gain accrued.

Shareholder’s subsequent recovery of tax and own liability to tax

(4) The connected person assessed to tax under this section may recover the tax paid from the company.

(5) This section does not affect the connected person’s own liability to tax in respect of the capital distribution (section 583), in so far as it represents a disposal of shares.

Relevant Date: Finance Act 2021