The Commissioners for HMRC v A Tax Payer

The exceptional-circumstances exception to the statutory residence day count in paragraph 22(4) of Schedule 45 to the Finance Act 2013 is wholly objective. The taxpayer must prove each cumulative condition for each day claimed.

"Prevent" means stopping departure or making it impossible, rather than merely hindering it. A moral or conscientious obligation to remain in the United Kingdom is not itself an exceptional circumstance and cannot convert objectively ordinary circumstances into exceptional ones. The tribunal must identify objectively proven facts showing both why the taxpayer could not leave on each day and what subsequently changed to permit departure.

The Taxpayer moved to Ireland shortly before the 2015–16 tax year and declared herself non-UK resident. It was common ground that she had three UK ties and was present in the United Kingdom on 50 nights. She would be UK resident unless five days could be disregarded under paragraph 22(4) of Schedule 45 to the Finance Act 2013.

The First-tier Tribunal allowed her appeal, holding that the need to care for her alcoholic and depressed twin sister and the sister's minor children amounted to exceptional circumstances. HMRC appealed from A Taxpayer v HMRC [2022] UKFTT 00133 (TC). The central issue was whether the statutory exception was established for each of the five disputed days.

1. Appeal allowed. The Upper Tribunal set aside the FTT's decision, remade it, and dismissed the Taxpayer's appeal. She was UK resident for 2015–16.
2. Paragraph 22(4) imposes five cumulative and objective conditions. The taxpayer must establish that the circumstances were exceptional and beyond her control; that she would not have been present at the end of the day but for them; that they prevented her from leaving; and that she intended to leave as soon as they permitted.
3. The word prevent in paragraph 22(4) means stopping an intended departure or making it impossible. It is different from mere hindrance. The FTT therefore erred by treating moral or conscientious inhibitions as capable, without more, of preventing departure. A moral obligation towards family members is not itself an exceptional circumstance, nor can it make objectively commonplace circumstances exceptional.
4. The exception must be assessed day by day. An itemised account is not invariably required, but there must be sufficient credible evidence to support findings on every statutory condition for every claimed day. The FTT had no evidential basis for finding that the Taxpayer was prevented from leaving on the disputed days, or for identifying what changed when she departed.
5. The FTT's findings were also internally inconsistent. Having found that the sister's alcoholism and depression, including their consequences for her family, were not exceptional circumstances, it could not treat the Taxpayer's need to care for the sister and children as converting the same situation into exceptional circumstances. The proven circumstances did not meet the statutory standard.
6. Under section 12 of the Tribunals, Courts and Enforcement Act 2007, the Tribunal remade the decision rather than remitting it. The circumstances of both visits were not exceptional and did not prevent departure within paragraph 22(4).

• Upper Tribunal (Tax and Chancery Chamber): HMRC's appeal was allowed. The Tribunal set aside the FTT decision, remade it, and dismissed the Taxpayer's appeal.
• First-tier Tribunal (Tax Chamber): The Taxpayer's appeal was allowed in A Taxpayer v HMRC [2022] UKFTT 00133 (TC).