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Exceptional Circumstances exemption in Statutory Residence Test (A Taxpayer v HMRC)

Published on: 17 May 2022
Published by: LexisPSL
  • Exceptional Circumstances exemption in Statutory Residence Test (A Taxpayer v HMRC)
  • What are the practical implications of this case?
  • What was the background?
  • What did the court decide?
  • Case details

Article summary

Private Client analysis: The First-tier Tribunal found that the days which the taxpayer spent in UK to care for her twin sister and her sister’s minor children should be treated as falling with the exceptional circumstances exemption in paragraph 22(4), Schedule 45 Part 1 to the Finance Act 2013. This case is of particular interest to those advising on tax residency as it the first time that exceptional circumstances has been subject to judicial review. The judgement considers the correct statutory interpretation of ‘exceptional circumstances’ and whether the taxpayer satisfied that exemption. The tribunal noted that the statutory language concerning exceptional circumstances, while narrow, is ‘entirely clear’ and HMRC’s attempt to argue a narrower interpretation were rejected. The burden of proof is on the taxpayer to show the conditions for exemption were satisfied. The tribunal considers that the combination of caring for the sister and, particularly, for her minor children at a time of crisis does constitute exceptional circumstances. Written by Adam Bonell, partner at H W Fisher LLP. or take a trial to read the full analysis.

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