HMRC queries 'exceptional circumstances' claims relating to tax residence test

Thursday, 06 October 2022
HMRC is sending educational letters to thousands of taxpayers whose self-assessment returns between 2020 and 2022 include 'exceptional circumstances' claims for days that do not count towards their tax residence.

Under the statutory residence test (SRT), days attributed to exceptional circumstances can be disregarded in some cases, so a taxpayer may be considered not resident in a tax year when they may have otherwise been considered UK tax-resident. HMRC's guidance on this issue was extended during the 2019/20, 2020/21 and 2021/22 tax years to set out when days impacted by the COVID-19 pandemic may be considered 'exceptional circumstances'.

In April 2020, the UK's then-chancellor also announced temporary changes to the SRT for skilled persons moving to the UK to work on COVID-19-related activity. Periods spent in the UK by such individuals during the lockdowns would not count towards the residence tests, thus protecting their non-UK earnings from UK taxation, although the qualifying criteria were tightly targeted to minimise the risk of abuse.

However, these concessions did not solve all the related problems, as HMRC did not extend the exception beyond 60 days.

Now that many self-assessment returns have been submitted for the relevant years, HMRC says that common errors are appearing in the SA109 (residence, remittance basis etc. supplementary pages) boxes relating to the 60-day limit per tax year on exceptional circumstances. Some taxpayers have also claimed days that go above the 57-day limit for COVID-19-related work in the 2020/21 tax year.

The letters being despatched this month contain consolidated guidance references in a single help sheet and highlight the common errors. Taxpayers and agents are being asked to check their filings against this guidance and amend the return where any of these errors apply.

HMRC will write to unrepresented customers directly and those with acting agents will receive a copy of the letter. HMRC is also planning an educational webinar for agents on exceptional circumstances.


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