Ukraine conflict: the effect on statutory residence
HMRC has updated its guidance to confirm that non-UK resident individuals returning to the UK from Russia, Belarus or Ukraine can disregard UK days due to exceptional circumstances. How might this affect the tax position?
Advice from the Foreign & Commonwealth Office (FCO) is against all travel to Russia, Belarus and Ukraine. In response, HMRC has updated its guidance to clarify that individuals returning to the UK from these territories would qualify for days spent in the UK to be disregarded due to exceptional circumstances under the statutory residence test (SRT). In practice, this means that more time can be spent in the UK than usual without becoming UK resident, due to the exceptional circumstances. However, the legislation caps the number of disregarded days at 60, regardless of the time those territories remain on the FCO’s no travel list.
In our opinion, we are unlikely to see any change to the 60-day limit, as the government did not extend this for those stuck in the UK due to coronavirus. Being brought into the UK tax net could be huge for those affected with potential knock-on effects such as those relying on temporary non-resident rules paying tax on prior year capital gains through no fault of their own. Anyone who has recently returned to the UK should check their likely residence position using the SRT, and seek advice accordingly.
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