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Following recent concerns that expatriates and UK non-residents who may have found themselves stranded in the UK as a result of the coronavirus shutdowns could end up with higher UK tax bills, HMRC has published guidelines on what counts as “exceptional circumstances’’
The statutory residency test found on the HMRC website, which determines whether an individual will count as a UK resident and therefore be liable to UK income tax, stipulates that to be counted as non-resident, you must spend no more than 183 days in Britain.
However, you will be relieved to hear that it does offer some leeway for “exceptional circumstances”. Currently, up to 60 days may be ignored for tax purposes, with situations such as “local or national emergencies, civil unrest, natural disasters, the outbreak of war or a sudden serious or life-threatening illness or injury” potentially counting as exceptional.
The newly released article release from HMRC explicitly recognises the impact of coronavirus and provides more details about what “exceptional” means in these circumstances. However, there is no mention at this stage of increasing the number of days that may be discounted.
HMRC says:
“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:
the circumstances are considered as exceptional’’
We, as well as most other accountants and taxpayers welcomes the guidance as a sign that HMRC recognises many people may be in difficulties not of their own making. It has always been difficult to get HMRC to agree to exceptional circumstances, so HMRC’s recently published coronavirus guidance is as significant as it is welcome. We are living through a concerning and uncertain time, so it is pleasing that individuals who are being prevented from travelling are receiving this reassurance at such an early stage. This approach is not something seen in the past, instead HMRC tend to consider potential exceptional circumstances on a case-by-case basis but this is a strong indication from HMRC that where they have the discretion, they are open to exercising it.”
Peter undertook business studies at Kingston University after leaving school and then accepted a place working for the Inland Revenue, working firstly at Walton on Thames and then promoted and relocated to Richmond. He was then offered a job with Wilkinson Latham, a small firm of Chartered Accountants, where he had worked for over 27 years and finally became a partner, before joining the tax team at WSM in 2014. In his spare time, you may occasionally find him at Box Hill with his beloved Classic Dragstar Motorbike.
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