HMRC Guidance on COVID-19 Part 2: Statutory Residence Test
The Statutory Residence Test provides that an individual is considered to have spent a day in the UK if they are in the UK at the end of the day (midnight) subject to several exceptions, one of which is exceptional circumstances. The exception applies for 60 days only in any given tax year.
During the COVID-19 pandemic HMRC have confirmed that the following circumstances are considered exceptional:
- an individual is quarantined or advised, by a health professional or public health guidance, to self-isolate in the UK as a result of COVID-19;
- an individual is advised by official government advice not to travel from the UK as a result of COVID-19;
- an individual is unable to leave the UK as a result of the closure of international borders; or
- an individual is asked by their employer to return to the UK temporarily as a result of COVID-19.
Exceptional days up to a maximum of 60 days per tax year will be disregarded for the purposes of:
- The first automatic UK test (where the taxpayer spends more than 183 days in the UK)
- The first automatic overseas test (where the taxpayer spends fewer than 16 days in the UK)
- The 90 day tie in the case of the sufficient ties test (where the taxpayer spends fewer than 91 midnights in the UK). This will be relevant in determining how many ties the taxpayer has in the next two years.
But importantly the concession will not apply for the counting of days in relation to:
- the family tie (if an individual spends more than 60 days with a minor child in the UK)
- the accommodation tie (whether the individual has a place available here for a continuous period of at least 91 days)
- the work tie (the individual must not work in the UK more than 39 days for more than 3 hours or more even on exceptional days)
- the country tie (if more midnights are spent here than in the other country and the individual is a “leaver”)
- Full Time Working Abroad (if the individual is working for more than 30 days in the UK or spends insufficient time working abroad)
Currently there is no definitive date after which all days are regarded as exceptional for 2019/2020. HMRC are still considering this point. 23 March 2020 (lock down announced) would seem to be a reasonable point.
An Assessment to Tax is never ‘stale’, but it might be out of date: HMRC v Tooth
This article briefly discusses the key points arising out of the decision of the UK Supreme Court in HMRC v Tooth  UKSC 17. The case considered (1) whether a discovery assessment could become “stale” and (2) the meaning of the phrase “deliberate inaccuracy”.
VATA 1994 s.47, Agency, Onward Supply Relief, & Double Taxation
On 12 July 2021, the First-tier Tribunal (Tax Chamber) (“FTT”) released its decision in Scanwell Logistics (UK) Limited v HMRC  UKFTT 261 (TC), rejecting the taxpayer’s claim for onward supply relief (“OSR”).
Whilst OSR is now limited, post-Brexit, to goods imported into Northern Ireland for onward supply to the EU, the FTT’s discussion of agency under section 47 of the Value Added Tax Act 1994 (“VATA”) is of broader interest.
The case serves as a reminder of the significant financial consequences that can result from errors in tax planning, as Scanwell was ultimately held liable for £5.7 million in unpaid import VAT despite the fact that the imported goods almost immediately left the UK (which, if properly planned, could have meant Scanwell was relieved from liability to import VAT).
Draft Finance Bill 2022—tax avoidance measures
Helen McGhee, senior associate at Joseph Hage Aaronson LLP, considers the draft Finance Bill 2022 clauses published on 20 July 2021 in relation to tax avoidance and recent updates to the tax avoidance regime.
Getting Closer: A Global Minimum Tax on Corporations
On 1 July 2021, US Treasury Secretary Janet Yellen announced that countries representing over 90% of global GDP had agreed to a global minimum tax on corporations (“GMCT”). The GMCT seeks to put a floor on tax competition on corporate income through the introduction of a minimum corporate tax of at least 15%. Whilst certain elements give rise to positive expectations, some caveats should be noted. Much will depend on (1) the outcome of future political negotiations and (2) the detail of the drafting at international and national levels.
The DBKAG & K (CJEU) decision: an opportunity for investment funds?
On 17 June 2021, the European Court decided the joint cases K (C-58/20) and DBKAG (C-59/20) regarding whether the supply of certain services constituted the “management of special investment funds”, benefiting from the VAT exemption enshrined in Article 135(1)(g) of Council Directive 2006/112/EC.