Over the past few months HMRC has provided a number of comments in relation to the impact of COVID-19 on UK tax residence and the Statutory Residence Test (SRT). They recognise that the pandemic has hampered the ability to move freely to and from the UK and the knock on effect this may have on an individual’s tax position. The SRT has always allowed certain flexibility in counting UK days where an individual is in the UK due to exceptional circumstances. This very much has to be reviewed on a case by case basis however.
HMRC has now published guidance to help taxpayers understand where they consider days spent in the UK to be “exceptional” due to COVID-19 and therefore where these days can be disregarded when counting total days spent in the UK for SRT purposes. This must be read in conjunction with the current published guidance on exceptional circumstances along with the SRT guidance and legislation as a whole.
The guidance has been included as Annex D of the SRT and covers areas such as:
Although the published guidance is very welcome, its application must be considered within the wider context of the SRT and pre-existing HMRC materials and tax legislation. Each scenario must still be reviewed on a case by case basis. This is not a blanket agreement to allow up to 60 days spent in the UK to be disregarded for any taxpayer spending additional time in the UK due to the pandemic. The practical application of these measures and HMRC’s approach will be seen over the coming months and years, especially with regard to 2019/20 and 2020/21 UK tax returns and current payroll processing for companies. As the situation continues to unfold there may also be further guidance published by HMRC.
Andrew Bailey
andrew.bailey@bdo.co.uk