Exceptional circumstances

When can days be ignored for the statutory residence test?

Counting your UK days is an important part of the statutory residence test (SRT), if you spend time both inside and outside the UK. As a general rule, you count a UK day when you are in the UK at midnight.

The number of UK days is fundamental to deciding a UK residence status for a tax year, so every day matters. In limited situations, a day may be disregarded where you remain in the UK because of exceptional circumstances. However, no more than 60 days can be disregarded in a tax year, and this is a limit rather than an automatic allowance.

HMRC’s guidance states:

“Days spent in the UK may be ignored if the individual’s presence in the UK is due to exceptional circumstances beyond their control. This will usually only apply to events that occur while an individual is in the UK and which prevent them from leaving the UK.”

What counts as an exceptional circumstance?

Examples may include civil unrest, a natural disaster, the outbreak of war, or a sudden serious or life-threatening illness or injury. Life events such as a birth, marriage, planned surgery, divorce, or bereavement are not routinely treated as exceptional.

Successfully claiming exceptional circumstances can be difficult. HMRC may test the facts closely, even where a claim appears reasonable.

Civil unrest, war and official travel advice?

What if official advice from the Foreign, Commonwealth & Development Office (FCDO, formally FCO) tells you to avoid travelling to a particular region?

HMRC guidance under RFIG22250 states the following:

‘Exceptional circumstances will generally not apply in respect of events that bring an individual back to the UK. However, there may be circumstances such as civil unrest or natural disaster where associated FCO advice is to avoid all travel to the region.

Individuals who return to and stay in the UK while FCO advice remains at this warning level would normally have days spent in the UK ignored under the SRT, subject to the 60 day limit.’

The precise wording of the advice is important. “Avoid all travel” is not the same as “avoid all but essential travel”. If the warning is at the lower level, HMRC may reject a claim, so take care before assuming that days will be disregarded.

Individuals who decide to return to the UK from UAE due to the Iran war are unlikely to qualify for exceptional circumstances unless matters escalate and the FCDO advises against all travel to UAE. Those returning from Iran would qualify as the current FCDO advice is against all travel to that country.

Tax cases

The narrow interpretation by HMRC of exceptional circumstances has resulted in the matter being tested in the courts. The two predominant cases, A Taxpayer v HMRC and Michael Parker v HMRC found in favour of the taxpayers but most taxpayers would prefer not to be the subject of a court process which can be stressful, lengthy and expensive.

Do not plan right up to the limit

There are no guarantees when claiming exceptional circumstances, and the criteria is deliberately narrow. If your UK residence position depends on your day count, build in a sensible buffer rather than using every day available or leaving only one or two days spare. Illness, severe weather and cancelled travel can happen unexpectedly, but HMRC may not accept that the resulting UK days should be ignored. Exceeding your limit could have significant tax consequences.

When is a day ignored for exceptional circumstances?

Although it may seem exceptional circumstances would cause the day to be ignored for all purposes of the SRT (subject to the 60 day limit), unfortunately, that is not the case.

A day may be disregarded when counting the number of days in the UK, without the day being ignored for other parts of the SRT. A day associated with the use of a home, work days and family presence in the UK is not disregarded even if that day is accepted as being for exceptional circumstances. For example, an individual who exceeds the number of UK work days allowed under the SRT is still treated as exceeding the work day limits even if the days causing the breach are for exceptional circumstances.

Practical takeaway

It is recommended that you take advice early to ensure you are aware of your UK day limits under the SRT. Also, if you are in the UK due to an unexpected event which may take you over the allowed UK day limit, you should check whether the circumstances are likely to be regarded as exceptional circumstances and how this may impact the SRT automatic tests and sufficient ties test.

Planning ahead is far easier than defending a borderline claim later so make sure you leave a buffer for those unexpected events that no-one can plan for.

We have a designated team advising clients with international matters on their UK taxes.