Outstaying your welcome

The new statutory residence test may be useful for standard '¨UK trips, but it's lacking in compassion and foresight, says Fay Copeland

One of my clients, a Hong Kong domiciliary who travels to the UK fairly frequently to see friends and family, thinks the '¨new statutory residence test is great. He'll be fine '¨as long as he counts the days spent in the UK '¨and makes sure he is within the limit, he told '¨me.

Well, sort of…

Yes, there is a simple day-counting element to the test and this does make life easier. However, in the event of an emergency, it's complicated.

Another client, a non-UK resident non-dom, had to extend his recent stay here by about three weeks because his UK-based father died. He asked me whether the extra time could be discounted from his day-counting total for the year. The answer was no. There is a concession for days spent in the UK because of exceptional circumstances, but this is limited. It has caught out many people.

It seems incredible but the death of a family member - even a spouse or child - does not count as an 'exceptional circumstance'. Understandably, this came as a huge surprise to my client and it was very hard to deliver the bad news at such a sad time.

The rules are rigid. Days are discounted if '¨there are circumstances beyond your control that prevent you from leaving the UK and are not reasonably foreseeable, such as civil unrest, war '¨and natural disasters, and sudden or life-threatening illness or injury.

Fine, your client may think, if they have to stay in the UK because a close family member is in hospital, they can discount those days. Not necessarily. The current Revenue guidance is that days spent in the UK because of illness or injury will only be discounted if the affected person is you, your spouse, cohabitee or a dependant (child).

I had a non-dom client a few years ago who came to the UK for private surgery on a painful shoulder injury. It was not life-threatening but he wanted the surgery in London as he thought he'd get better treatment here. He travelled home before the suggested recuperation period was over because '¨he was concerned about exceeding his day limit and not being entitled to rely on the concession. His surgeon thought he was mad.

Travel problems are another thorny issue. '¨Staying in the UK because your flight is delayed '¨or Eurostar is cancelled is not regarded as an exceptional circumstance. Presumably this is because travel delays are supposed to be reasonably foreseeable, which says a lot about HMRC's confidence in our public transport system.

And a number of my firm's Middle Eastern clients have more to worry about at the moment. The exceptional circumstance concession specifies that the particular event must prevent you from leaving the UK. What if you're able to leave the '¨UK but can't travel to your destination? Or you '¨get there and have to return to the UK?

Concessionary treatment was granted at the time of the Arab spring, but that was by the old rules. Under a strict interpretation of the new legislation, '¨a client who stays in the UK because of unrest in their home country is not prevented from leaving '¨the UK. They could, for example, go somewhere '¨else in Europe.

Revenue guidance suggests this concession '¨will be allowed in limited circumstances, such '¨as where Foreign and Commonwealth Office '¨advice is not to travel to the destination, but '¨why this could not have been dealt with in the legislation is a mystery.

With the recent troubles flaring in Egypt, '¨my colleagues and I will be watching this closely.

Fay Copeland is partner and head of private client at Wedlake Bell

She writes the regular comment on inheritance in Private Client Adviser