Secondary Liability of Solicitors for Capital Gains Tax

02 December 2021


There is a potential that solicitors may be secondarily liable for capital gains tax in relation to disposals by non-residents. S 1034 of the Taxes Consolidation Act 1997 states that non-residents are liable to income tax of their agents. A similar provision is contained in s. 1035 of the TCA. While these sections relate to income tax, they are extended to capital gains by virtue of s. 1043 of the TCA.

In one sense, we are not the agent of our clients in buying and selling property, in that we haven’t been specifically appointed to go out and buy and sell property for profit by our client and are not entering into contracts in the client’s name. That is, were are not “in business” with our clients in buying and selling property. On the other hand, as facilitators of transactions, solicitors could easily be held to be a client’s agent. Particularly where for example we obtain an authority from our clients to sign contracts or a power of attorney to do so.

There is a potential then, as our client’s agents, that we could become liable for their capital gains tax on sales. So really we should ensure prior to passing proceeds of a sale to a non-resident vendor that we have an indemnity from our client for all capital gains tax. In addition, we should have an authority from our client allowing us to deduct the CGT from the sales proceeds and in addition remitting the Capital Gains to Revenue. Obviously before passing over proceeds a full and proper calculation of the CGT should be done and deducted and paid to Revenue prior to payment of net proceeds to the non-resident beneficiary.

As an extra precaution, you may consider not distributing funds to the client until such a time as you receive a notice of assessment from Revenue.

I deal with Notice of Assessments in my next blog. However, just to be careful in these situations. The Law Society Taxation Committee has also issued an ezine on the issue which is set out here.

For any help or assistance on tax, probate or will drafting issues please don’t hesitate to contact me on