If you live overseas, you will be used to keeping a strict count of the number of UK days you are present in the UK during the tax year to ensure that you are not deemed to be UK resident. The restrictions on movement created by the measures implemented to control the spread of Covid-19 create obvious concerns for those individuals who currently find themselves in the UK with little prospect of leaving when intended. HMRC has issued some helpful guidance as to how such circumstances may be interpreted with regard to the existing ‘exceptional circumstances’ concessions in the UK Statutory Residence Test.
The rules relating to exceptional circumstances are notoriously strict, the emphasis being on the word “exceptional”. If you exceed the permitted number of days in the UK which apply in your particular circumstances, you will be deemed to be UK resident and face UK taxation on your worldwide income. Exceptional circumstances cover an eventuality such a serious accident in the UK causing an extended stay in the country. A maximum of 60 UK days can be ignored under the exceptional circumstances rules.
The recent communication from HMRC has confirmed that, in respect of Covid-19, they will “look sympathetically” at individual claims and exceptional circumstances may apply 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.
- You are following official Government advice not to travel from the UK as a result of the virus.
- You are unable to leave the UK as a result of the closure of international borders, or
- You are asked by your employer to return to the UK temporarily as a result of the virus.
HMRC has issued a reminder that each case will continue to be assessed on its specific circumstances. Meanwhile we have three key messages for anyone concerned about days spent in the UK and the potential effect on their residence status:
- Health decisions and government guidance on social distancing are paramount and always come before tax-related decisions.
- It is even more important than normal to maintain an accurate record of time spent in the UK and that record should include clear notes as to why you were in the UK, e.g. working, holidaying, quarantined etc.
- Clients with concerns regarding their residence status should contact us for a more detailed discussion. Please email your usual RG contact in the first instance
It is likely that further guidance will be released as the crisis progresses and we will keep you updated.