Section 977 allows unpaid capital gains tax (CGT) owed by a company on the disposal of assets to be recovered from the company's shareholders.

These rules apply where an Irish resident company makes a capital distribution, other than on a reduction of capital, to a person (a beneficiary) connected with the company, and the capital distribution derives from a chargeable gain accruing to the company.  A capital distribution means a company distribution, including a distribution on a winding up, which is not taxed as income of the recipient (section 583).

A beneficiary may be assessed for any CGT arrears (not paid within six months of the due date) of the company in respect of that gain.

The assessment to be made on the beneficiary in the name of the company must be made within two years of the due date on which the company should have paid the tax, and may not exceed:

• the beneficiary's share of the capital distribution,
• his proportionate share of the CGT.

A beneficiary who pays the CGT may recover the tax from the company.

A beneficiary may have a separate liability to CGT where the capital distribution is treated as a disposal of an interest in his shares to the company.