Income tax

Court of Appeal grants taxpayer’s appeal on exceptional circumstances

The Court of Appeal (CA) has found that a taxpayer was non-UK resident, as six excess UK days were due to exceptional circumstances. Her moral obligation to care for a family member met this threshold. This overturned the Upper Tribunal (UT) decision and reverted to the First-tier Tribunal (FTT) decision.

The taxpayer moved to Ireland on 4 April 2015. In the 2015/16 tax year she received dividends on which more than £3m of income tax would have been due had she remained UK resident. In that tax year, she had to spend 45 or fewer days in the UK to be non-UK resident, but in fact spent 50 days in the UK. She argued that five of these days should be discounted, as she had visited the UK in December and February of that year to support her twin sister, who was experiencing serious ill health, and to assist in the care of her twin’s children.

The FTT found that she was non-UK resident as this qualified as exceptional circumstances. It accepted that she was the only person able to assist her twin sister at the time, and was under a moral obligation to come. The UT differed, allowing HMRC’s appeal as it found that moral obligations are not themselves exceptional circumstances; the person is not prevented by exceptional circumstances from leaving the UK but instead prevented by a sense of moral obligation.

The CA unanimously allowed the taxpayer’s appeal on every ground she argued. She had been prevented from leaving the UK in the ordinary sense of the word. Moral inhibitions in this case prevented her just as much as if she had been prevented from leaving by a broken leg. The CA agreed with the FTT that moral obligations can be exceptional circumstances, and found that the UT’s view on exceptional circumstances being a matter of law rather than fact was incorrect.

A Taxpayer v HMRC [2025] EWCA Civ 106

From Tax Update February 2025, published by Evelyn Partners LLP