HMRC has updated its Residence, Domicile and Remittance Basis Manual to confirm that acting on Foreign and Commonwealth (FCO) advice to avoid certain countries will qualify as exceptional circumstances for the purpose of the Statutory Residence Test (SRT). Its interpretation of the SRT conditions may be in doubt.

The Statutory Residence Test SRT provides an exception to the day counting rules where a taxpayer is forced to be present in the UK due to exceptional circumstances. 

HMRC's manual, at RDRM13250, notes that "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."

More controversially, HMRC's manual initially advises that “Exceptional circumstances will generally not apply in respect of events that bring an individual back to the UK”. Taxpayers may wish to note that this sentence is HMRC’s interpretation of the rules and one that may be open to challenge.

In a recent First Tier Tribunal decision, A Taxpayer v HMRC [2022] TC08464 HMRC argued that the 'exceptional circumstances' exemption applied only to persons who were already in the UK and, while they were in the UK, were overtaken by 'exceptional circumstances' which prevented them from leaving. The exemption did not, according to HMRC, apply to a taxpayer who came to the UK because of the 'exceptional circumstances' and who was then prevented from leaving by those same circumstances.

Judge, Guy Brannon noted that, “ There is no statutory justification for such a limitation of the test. Interpreted in its statutory context, paragraph 22(4) looks at why a taxpayer is in the UK at the end of a particular day and whether a taxpayer is prevented from leaving the UK at that time in order to determine the number of days spent in the UK. It does not look at why the taxpayer came to the UK in the first place or whether the taxpayer was already in the UK.”

Remembering that FTT decision does not create any new legal precedents, HMRC now may or may not change the text of their manual. Whether they do is up to them and whether they consider that they will adopt the judge's conclusions.

Useful guides on this topic

SRT: Statutory Residence Test
What is the statutory residency test? Why is it important and how does it work?

SRT: Day Counting Toolkit
This is a day-counting toolkit for the Statutory Residence Test.

SRT: Statutory Residence Test Toolkit
This is a freeview interactive tool to determine 'At a glance' whether you are UK resident or not in a tax year for 2013/14 onwards.

Non-resident Tax Toolkit
This toolkit covers the key UK tax issues for non-UK resident individuals holding UK assets and property and working in the UK. 

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