Statutory Residence Test - Tribunal rejects HMRCs arguments

In Michael Parker v HMRC [2026] UKFTT 652 (TC), the First-tier Tribunal (FTT) allowed the taxpayer's appeal, finding that four disputed days in the UK did not count for the purposes of the statutory residence test (SRT), as three days fell within the transit exception and one day within the exceptional circumstances exception.

Background

Michael Parker is a Chartered Engineer who worked overseas from July 2017 to June 2025, managing civil engineering and construction works in Iraq.

Mr Parker reported 100 days spent in the UK during the 2019/20 tax year but prepared his tax return as a non-resident in the UK under the full-time working overseas (FTWO) test, on the basis that he satisfied the FTWO conditions and was present in the UK for only 89 days using the day count rules.

All statutory references below are to Schedule 45, Finance Act 2013 (FA 2013), unless otherwise stated.

For the purposes of the day count rules, Mr Parker had disregarded:

1. three days on the ground that these met the transit day exception in paragraph 22(3);

2. one day when he was present in the UK due to exceptional circumstances under paragraph 22(4), as he was unable to travel until the next day on account of significant travel disruption that led to all flights being cancelled to his destination; and

3. seven days for COVID 19, under paragraph 22(7).

HMRC issued Mr Parker with a closure notice, assessing him to tax on his earnings for the 2019/20 tax year, on the basis that he was UK resident in that tax year and therefore subject to UK tax on his earnings. 

Mr Parker appealed the closure notice on the basis that he was not UK resident under the SRT. 

As it was agreed that Mr Parker met all of the other relevant conditions of the SRT, the key issue to be determined on appeal was whether Mr Parker spent fewer than 91 days in the UK during the 2019/20 tax year. If he did, he would not be UK resident under the SRT and not subject to UK tax on his earnings. 

FTT decision 

The appeal was allowed.

The FTT agreed with Mr Parker's calculation that he spent 89 days in the UK and therefore that he satisfied the third automatic overseas test under the SRT.

Of the total 100 nights that Mr Parker was physically present in the UK during the 2019/20 tax year, seven were excluded due to COVID-19, which HMRC accepted. 

Three further days were excluded under paragraph 22(3), as transit days, because Mr Parker arrived in the UK as a passenger, left the next day and did not engage in activities substantially unrelated to his passage through the UK. The FTT considered that Mr Parker meeting with his wife and stepdaughter because they were travelling with him on the next leg of his journey, were not activities that were to a substantial extent unrelated to his passage through the UK. 

The FTT was also of the view that one additional day was excluded under paragraph 22(4), because Mr Parker's flight was cancelled due to Storm Jorge closing Dublin Airport, which constituted exceptional circumstances beyond his control and prevented him from leaving the UK. The FTT applied the test in A Taxpayer v HMRC [2025] EWCA Civ 106, and considered: (1) what the factual circumstances were; (2) whether those circumstances prevented Mr Parker from leaving the UK; and (3) whether they were exceptional. To be exceptional a circumstance need not be unique or unprecedented or very rare, but it could not be one that was regularly, or routinely, or normally, encountered. The FTT found that the circumstances under consideration - the closure of a major international airport due to a named storm event, resulting in widespread operational disruption - were out of the ordinary course, unusual and not regularly or normally encountered by international travellers. The FTT therefore rejected HMRC's position that adverse weather conditions and flight cancellations could not be exceptional.

Comment

The FTT rejected HMRC's unduly narrow interpretation of the legislation. The decision provides helpful guidance as to when days in the UK can be disregarded for the purposes of the transit day and exceptional circumstances exceptions. 

Taxpayers will welcome the FTT’s decision on the transit exception, adopting a purposive approach to the meaning of 'a passenger’, for the purposes of paragraph 22(3). 

Read the FTT decision in Michael Parker.