COVID-19 - HMRC information sheet

The COVID-19 pandemic has significantly impacted globally mobile customers’ ability to travel since March 2020 and continues to have an effect on their working patterns.

HMRC has published and updated guidance, and introduced legislation, to assist taxpayers who may have been affected by the pandemic. They have now produced an information sheet highlighting the guidance available to assist taxpayers with the completion of their UK tax returns.

Within the information sheet HMRC has reminded agents that specific legislation was introduced to allow certain individuals, who were present in the UK for work related to COVID-19, either as a medical or healthcare professional or in relation to the development or production of medical products related to COVID-19, to disregard certain elements of the Statutory Residence Test (SRT). This change applied only for the period 1 March to 1 June 2020 and ensured that days spent in the UK and UK ties were disregarded for all SRT tests.

Further important notes for taxpayers include the following: -

The 60-day upper limit to exclude days spent in the UK due to exceptional circumstances has not been increased.
Any days on which an individual works in the UK for more than 3 hours will not covered by exceptional circumstances and will be counted as a UK workday.
An individual can claim exceptional circumstances for days they were unable to leave the UK due to COVID-19 travel restrictions (if their individual circumstances dictate this) up to the maximum of 60-days allowed by the SRT, when determining their UK residence position. These days are for the purposes of the SRT only.
The 183-day test when considering the Income from Employment article of a Double Taxation Agreement (DTA) is a separate test to the SRT. Therefore, any days discounted for exceptional circumstances under the SRT due to COVID-19 travel restrictions should be counted as UK days for the 183-day test under the relevant DTA.
The exception to this are days for ‘sickness’ which prevent the individual leaving the UK. HMRC accepts that days spent self-isolating/in quarantine due to COVID-19 may also be disregarded from the day count. Days where an individual was unable to leave the UK due to COVID-19 travel restrictions will continue to count as UK days for the purpose of the 183-day test.

It is important that care be taken when assessing the tax residency of those that were impacted by the COVID-19 pandemic to ensure that all necessary relaxations have been taken into account.

Andrew Bailey
andrew.bailey@bdo.co.uk