The Statutory Residence Test is quite a methodical and precise set of tests which are not open to much interpretation in the main. The application of ‘exceptional circumstances’ has, for most of us, rarely been seen in practice.
What Qualifies as Exceptional Circumstances
The main characteristics of an ‘exceptional circumstance’ are:
1. It is a situation which is entirely out-with your control.
2. You have no element of choice in where you spend your time.
3. Original guidance had it that for a circumstance to be exceptional it would almost always have to be an event that occurred while the individual is in the UK.
HMRC have however updated their guidance to include 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.[RDRM13250]
And they also offer the following examples of situations that would be considered exceptional:
The UK is currently experiencing the effects of the coronavirus (COVID-19) pandemic. Events resulting from the impact of the virus are changing rapidly and this guidance may change at short notice as situations change.
The coronavirus (COVID-19) pandemic may impact your ability to move freely to and from the UK or, require you to remain unexpectedly in the UK.
Whether days spent in the UK can be disregarded due to exceptional circumstances will always depend on the facts and circumstances of each individual case.
However, if you:
• are quarantined or advised by a health professional or public health guidance to self-isolate in the UK as a result of the virus
• find yourself advised by official Government advice not to travel from the UK as a result of the virus
• are unable to leave the UK as a result of the closure of international borders, or
• are asked by your employer to return to the UK temporarily as a result of the virus
the circumstances are considered as exceptional. [RDRM11005]
Limit of ‘Exceptional Circumstances’ days
The maximum number of ‘exceptional days’ that can be claimed in one tax year is 60. For many people, these 60 days may already be used and now is the time to determine how long more you can stay before losing your non-resident status.
Application of ‘Exceptional Circumstance’
The ‘exceptional circumstance’ claim can reduce UK days for various purposes including days of UK presence for the sufficient ties test and the majority of the automatic overseas tests however it must be noted that it will not reduce days for the count of:
• Accommodation tie
• Work tie
• Test for having a UK home
• Country tie
Pitfalls to avoid when reviewing your Residence Position
1. As the exceptional circumstances rules will not apply to reduce the number of days for a work tie or an accommodation tie etc. you may find that you have more ties than you had anticipated and thus have much fewer days available to you in the UK before becoming resident.
2. Although you may not be able to return to the country in which you usually reside due to COVID, that does not mean that you cannot perhaps take a short leisure trip to Ireland or France. If you chose to make such a trip this could compromise your period of ‘exceptional ‘ days, as it introduces an element of choice in to the equation – making the circumstance no longer entirely outside of your control.
3. If you claimed for ‘split-year’ treatment in 19/20 and due to COVID become non-resident in 20/21, your ‘split-year’ claim will be invalidated and you would be subject to UK tax on your foreign income in that part of the tax year.
If you are hoping to claim non-residence in 20/21 and are worried about your claim please get in touch with us as soon as possible – quite literally, every day counts.