Article provided by Lynne Rowlands, Private Client Tax Partner at Moore Kingston Smith, for Beacon Gainer, private wealth advisory services group.

The Coronavirus pandemic has caused extensive upheaval in how we live our lives, particularly with widespread restrictions to freedom of movement to which we have previously been accustomed. Closed borders, lockdown rules and working from home, amongst other things, have featured since around March 2020.

It is often considered by an individual leaving the UK when their UK tax residence status will end and what limits on return trips to the UK they may have in future before being considered UK tax resident. There has been a Statutory Residence Test since 6 April 2013 to determine UK tax residence status for individuals each UK tax year.

There are several parts to the Statutory Residence Test. Counting days of presence in the UK and considering certain ties an individual has to the UK are important for concluding their UK tax residence position for a tax year.

If an individual is present in the UK at the end of a day (i.e. at midnight), that day counts as a day spent by the individual in the UK. In response to the Coronavirus pandemic, there was a very limited addition to the law to exclude days of presence in the UK for specified medical, healthcare and scientific professionals who were only in the UK from 1 March 2020 to 1 June 2020 to help in certain areas relating to the pandemic.

For everyone else, there is a general provision in “exceptional circumstances” where an individual would not be present in the UK but for those specific circumstances. If this provision applies, it allows up to 60 days of presence in the UK per tax year to be disregarded when counting days of presence in the UK, as long as the individual intends to leave the UK as soon as the circumstances permit. Clearly, with the length of the pandemic, 60 days is a very limited exemption if it applies and there has been no general change in law to extend that number of days.

The law only gives broad examples of exceptional circumstances as “national or local emergencies such as war, civil unrest or natural disasters, and a sudden or life-threatening illness or injury.”

In practice, HMRC considers that exceptional circumstances will normally apply where the individual has no choice concerning the time they spend in the UK, or in coming back to the UK. Essentially, this means such circumstances must be those the individual has no control or influence over, and which could not reasonably have been foreseen.

At the height of the pandemic, HMRC issued guidance to illustrate the circumstances related to Coronavirus it would consider as “exceptional”. HMRC does not give advance assurance that it will agree in individual cases that exceptional circumstances apply. However, cases that may be considered exceptional by HMRC in the Coronavirus pandemic are if an individual:

  • is quarantined or advised by a health professional or public health guidance to self-isolate in the UK as a result of the virus;
  • is advised by official government guidance not to travel from the UK as a result of the virus;
  • is unable to leave the UK as a result of the closure of international borders; or
  • is asked by their employer to return to the UK temporarily as a result of the virus.

In the early days of the pandemic, where the situation was fast moving and unprecedented, HMRC was more likely to accept that the exceptional circumstances led to someone who would otherwise be outside the UK to have to come to or remain in the UK for an extended period of time. This may not be the case after it was clear from the situation that an individual getting ‘stuck’ in the UK was more likely but chose to travel to the UK with this prior knowledge.