A successful appeal against the tax authorities in the recent case of Parker v HMRC* gives clarity to tax practitioners and comfort to internationally mobile individuals and their families that common sense should prevail in interpreting the rules that determine UK tax residence.
Background
Mr Parker was a British Chartered Engineer working fulltime in Iraq during the 2019/20 UK tax year. On account of his fulltime work overseas, provided he spent fewer than 91 days in the UK in that tax year he would be non-UK resident in the tax year. Mr Parker considered himself to have spent 89 days in the UK whereas His Majesty’s Revenue and Customs (“HMRC”) disagreed – on HMRC’s analysis, Mr Parker had had spent 93 days in the UK.
With just under £65,000 tax at stake, HMRC brought the appeal to the First Tier Tax Tribunal (the “FTT”). The discrepancy between Mr Parker’s day counting and HMRC’s day counting can be explained through their respective interpretations of the day counting rules as set out in the Statutory Residence Test (the “SRT”).
The Law and the Decision
Broadly, a day typically counts as a day spent in the UK for the purposes of the SRT if the individual is present in the UK at the end of the day (i.e. at midnight). In certain limited circumstances, such a day can be disregarded.
These limited circumstances include the so-called “transit exception”, and the “exceptional circumstance exemption”
The transit exception
A day ‘transiting’ through the UK will not count where: (i) the individual arrives in the UK as a passenger on that day; (ii) leaves the next day; and (iii) between arrival and departure does not engage in activities that are to a substantial extent unrelated to the individual’s passage through the UK.
On three occasions, Mr Parker transited through the UK, staying overnight in a hotel near the airport and left the following day. He met with his wife and stepdaughter who joined him for the second leg of his journey. Unusually, Mr Parker had booked separate tickets for each leg of his journey.
HMRC argued that Mr Parker did not meet the requirements of the transit exception because: (a) On account of having separate tickets for the onward leg of his journey, he ceased being a passenger on arrival to the UK; and (b) Meeting with his wife and stepdaughter at his hotel and at the airport so that they could travel to the onward destination together constituted activities which were to a substantial extent unrelated to his passage through the UK.
The FTT disagreed with HMRC and upheld Mr Parker’s claim to the transit exception on these facts – in doing so, the FTT made some helpful comments which give taxpayers and advisers a good insight into how the third condition of the transit exception will be interpreted as follows:
“Had he met with family and friends for any reason other than onward travel with him that is likely to be an activity that is substantially unrelated to his passage through the UK.”
“MP did not travel into central London, return to his family home, or undertake any activity that could sensibly be characterised as an end in itself. The hotel accommodation, meals taken there or at the airport, and travel between the hotel and the terminal were all ancillary and functionally connected to onward international travel.”
Exceptional Circumstances
Days may be disregarded due to ‘exceptional circumstances’ where: (i) the circumstances are exceptional; (ii) the circumstances are beyond the individual’s control; (iii) the individual would not have been present in the UK at the end of the day but for those circumstances; (iv) the circumstances prevent the individual from leaving the UK; and (v) the individual intends to leave the UK as soon as those circumstances permit.**
Mr Parker was due to fly to Dublin on 20 February 2020 when his flight was cancelled due to severely bad weather. The airline made provision for its stranded passengers, resulting in Mr Parker staying overnight at Heathrow in order to catch a rescheduled flight the following day, which he did. His checked in baggage remained with the airline overnight.
HMRC argued that the circumstances were not exceptional. It further argued that because the storm had abated by the end of the day, the circumstances did not truly prevent Mr Parker from leaving the UK, and that because he could have done so in theory, he did not intend to leave the UK as soon as possible. In a victory for common sense the FTT concluded that:
“Ordinary societal expectations do not require a passenger, in the midst of significant disruption, to disregard airline arrangements, abandon checked in luggage or attempt speculative alternative travel in order to demonstrate an intention to leave the UK “as soon as those circumstances permit.”
While it was agreed that adverse weather is common, it was conceded that flight cancellations due to adverse weather are uncommon, as such future stranded travellers can take comfort that they are not expected to attempt unsensible contortions to please HMRC.
What Next?
HMRC has the right to appeal. In the meantime, the decision in Parker v HMRC provides welcome clarity whilst serving as a timely reminder that the Statutory Residence Test, which spans some 26 pages of legislation, is nuanced and often turns on a detailed factual analysis making professional advice an essential component for internationally mobile individuals and their families.
For more information, please contact:
Hannah Hughes, Partner
Hannah.hughes@woflaw.com
+44 (0)1242 710245
John Gibbons, Trainee Solicitor
John.gibbons@woflaw.com
+44(0)1242 710204
* [2026] UKFTT 00652 (TC)
** A Taxpayer v HMRC [2025] EWCA Civ 106
This article is provided for information only and does not constitute advice in relation to any specific situation. Specific advice should always be sought for any situation, whether within the scope of the laws explained in this note or otherwise. Wiggin Osborne Fullerlove has no liability to any person acting in reliance upon this note