UK Tax Residence: Understanding the “Exceptional Circumstances” Test

In a recent case, HMRC v A Taxpayer, the UK Upper Tribunal clarified the interpretation of the “exceptional circumstances” provision in the statutory residence test, which determines UK tax residence. Bloomberg Tax has a review of the Upper Tribunal’s decision in a recent case. The decision has important implications for individuals who may have exceeded the allowed number of days in the UK due to unforeseen emergencies.

Understanding the Statutory Residence Test

Under UK law, individuals are only liable for UK income tax if they are UK residents. The statutory residence test consists of two parts: the automatic residence test and the sufficient ties test. The number of days spent in the UK plays a crucial role in determining residency status for tax purposes.

  • Automatic residence test: This test considers various criteria, including the number of days spent in the UK.
  • Sufficient ties test: This test takes into account both the number of UK ties and the number of days spent in the UK.

The “Exceptional Circumstances” Provision

The exceptional circumstances provision, outlined in paragraph 22(4) of Schedule 45 of the Finance Act 2013, allows individuals to disregard certain days spent in the UK if they were unable to leave the country due to exceptional circumstances beyond their control. A day can be disregarded if the individual intends to leave as soon as those circumstances permit.

Examples of exceptional circumstances include sudden or life-threatening illness or injury. It’s important to note that moral obligations, such as the duty to care for family members, do not qualify as exceptional circumstances.

HMRC v A Taxpayer: The Case

In the case of HMRC v A Taxpayer, the taxpayer had moved from the UK to the Republic of Ireland in April 2015. During the tax year 2015-2016, she received approximately £8 million in dividends from shares her husband had transferred to her. The taxpayer claimed she should not be considered a UK resident for tax purposes.

The taxpayer’s argument relied on the exceptional circumstances provision due to her sister’s alcoholism and depression. Her nieces were living with the sister in the UK at the time. She had spent 50 nights in the UK, exceeding the 45-day limit set by the statutory residence test. The taxpayer claimed that the risk of her sister committing suicide constituted an exceptional circumstance and prevented her from leaving the UK until her sister was in a place of safety.

However, the First-tier Tribunal rejected this argument due to insufficient evidence. While the tribunal accepted the taxpayer’s secondary argument that she was unable to leave the UK until suitable care arrangements were made for her nieces, the Upper Tribunal overturned this decision and held that the taxpayer was indeed a UK tax resident.

Implications and Guidance from the Upper Tribunal

The Upper Tribunal acknowledged that this was the first case considering the exceptional circumstances test under paragraph 22. They provided guidance on how to approach the test correctly.

The test requires establishing the exceptional circumstances, their beyond-control nature, the potential absence from the UK if not for those circumstances, the prevention of leaving the UK, and the intention to leave as soon as those circumstances allow. It is crucial to consider each excess day separately and gather evidence to support the claim.

Documents such as hospital discharge papers (in case of illness) or revised Foreign Office guidance (in case of local emergencies) can be useful evidence. If such documentation is not available, testimony from the taxpayer and other witnesses with direct knowledge of the facts can be relied upon.

The Upper Tribunal emphasized the importance of retaining contemporaneous documentation to support a claim for exceptional circumstances.


The recent decision in HMRC v A Taxpayer provides clarity on the interpretation of the “exceptional circumstances” provision in the UK statutory residence test. It highlights the objective nature of the test and the need for robust evidence to support a claim. Individuals who find themselves in a situation where they exceed the allowed number of days in the UK due to unforeseen emergencies must carefully consider the criteria set out by the Upper Tribunal. Seeking professional advice and retaining relevant documentation are crucial steps in navigating the complex rules of UK tax residence.