Introduced more than a decade ago, the statutory residence test provides clear rules on determining UK tax residence, based mainly on the number of days spent in the UK.
However, as the recent Court of Appeal decision in Taxpayer v HMRC [2025] EWCA Civ 106 shows, life is not always predictable, and the law does allow some flexibility where ‘exceptional circumstances’ arise.
Understanding the case
The case involved a taxpayer who had moved to Ireland but returned to the UK several times during the 2015/16 tax year to support her sister, who was suffering from severe mental health issues.
Although she spent 50 days in the UK, she argued that some days should be disregarded under the statutory residence test because of exceptional circumstances beyond her control.
Initially, the First Tier Tribunal agreed. The Upper Tribunal later disagreed, ruling that only physical impossibility (not moral obligations) could ‘prevent’ someone from leaving the UK.
However, the Court of Appeal has now reinstated the original decision, offering valuable guidance for cross-border tax planning.
Key lessons from the Court of Appeal
The Court of Appeal made two important clarifications:
- A compelling moral obligation, such as caring for a family member, can qualify as an exceptional circumstance if it would prevent a reasonable person from leaving the UK.
- The test for what is ‘exceptional’ is a question of fact. It is not limited to strict legal or physical barriers and should reflect societal expectations.
The decision offers some much-needed balance by recognising that genuine personal emergencies can affect an individual’s ability to leave the UK, and that tax residence rules should take this into account.
Practical points for businesses and individuals
For internationally mobile individuals, this decision provides reassurance that the rules are not inflexible.
However, the evidential burden remains high. Individuals must be able to prove that exceptional circumstances applied for each day they seek to disregard.
Key points to consider:
- Keep detailed records – Emails, text messages, medical evidence and travel documents can all be important.
- Plan proactively – If exceptional circumstances arise, seek advice as early as possible.
- Monitor time spent in the UK carefully, especially given the sixty-day limit for disregarded days each tax year.
For businesses with internationally mobile employees, reviewing global mobility policies and supporting staff with timely advice is increasingly important.
Planning a move or managing international operations, and want help protecting your financial position? Contact us today to find out how we can support you.
Reanda UK is a subsidiary of leading independent accountancy firm Grunberg & Co Limited. Our aim is to help businesses and individuals to navigate the UK’s world-renowned business and tax infrastructure, and to support them with their international ambitions. To find out how we can help you, please contact us.