HMRC (Her Majesty’s Revenue & Customs) has announced that it will be giving special treatment to non-residents who are forced to stay in the UK exceeding their permitted number of days. With quite a few expats unable to leave due to closed borders and lock downs, I was expecting an announcement and this is helpful news.
Anyone who exceed the permitted number of days in the UK, in accordance with the Statutory Residency Test (see here for full details) could find that they are deemed UK resident for tax purposes and liable for UK income tax on their worldwide income. As many are working remotely while in the UK, it is easy to breach the ‘substantive work’ condition that permits just 40 days to be spent in the UK if working.
Officials have stated that individuals who could breach the maximum number of days due to not being able to leave the UK or return to their country of residence will be able to apply for special treatment under what are referred to as the ‘exceptional circumstances’ regulations and will ‘look sympathetically’ at individual cases.
Under the Statutory Residency Test, which come into effect in April 2013, the exceptional circumstances guidance specified a maximum of 60 days that can be potentially disregarded if they are deemed outside of the individual’s control.
HMRC’s interpretation of ‘exceptional circumstances’ is usually fairly narrow but guidance has been issued with their current view. This advises that days can be disregarded for the Statutory Residency Test if you:
- Are quarantined or advised by a health professional or public health guidance to self-isolate in the United Kingdom as a result of the virus.
- Find yourself advised by official Government advice not to travel from the United Kingdom as a result of the virus.
- Are unable to leave the United Kingdom as a result of the closure of international borders, or
- Are asked by your employer to return to the United Kingdom temporarily as a result of the virus.
The guidance makes no mention of extending the 60-day limit and at this point in time we simply don’t know if that will be sufficient. Each case will be looked at individually, based on the facts and circumstances, so this is not a free pass in any way. If the current restrictions continue for an extended period, HMRC may need to issue further guidance but, as with many things right now, we will have to wait and see.
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