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Covid, residence and definition of "Exercised in"


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Looking for opinions here. Have a client who, because of Covid restrictions, only spent 67 days in the UK in 20/21. If days spent away because of Covid are taken into account, that increases to (annoyingly) 183 days. It is highly likely that she will be UK resident using the SRT (ties) tests anyway.

Earning from employment received during her period abroad have been taxed in the other country, and I'm going to write to the accountant that prepared her taxes there for details of the calculation (I have the foreign Return, but no detail of how the income has been calculated).

Now, I still need to properly consider her residence position, and whilst I can find details of Covid relaxations that will determine her residence status, the same cannot be said for determining her non-resident status, so if anyone can point me in the right direction, I'd be grateful.

Then comes the issue of interpreting the DTA, which refers to employment "Exercised in" one state or the other. Her employer is a UK arm of a multi-national company, and were it not for Covid, her duties would have been performed in the UK. Without Covid, the question would not arise. Taking the natural meaning of "Exercised in" would, if she is non-resident, put those earnings outside of HMRC's jurisdiction, but his seems to provide an escape route from UK tax for anyone with the means to become non-resident for a year to work remotely in a more advantageous state to remove income from employment from UK taxes, which is surely not what the legislation or the DTA intend.

My brain is blowing up, and I could do with some help bringing it back into focus. There's a substantial amount of tax (£30K) involved.

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By armstrongbell
10th Jun 2021 15:04

I've been dealing with a covid restriction residency client today but in my case they were stuck here when usually abroad. The exceptional circumstances for disregarding being here is 60 days so does that flip to only considering 60 extra days away in your case? You have probably seen the following and may not be quit what you need anyway:

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By Matrix
10th Jun 2021 15:56

I have one too. Already paid tax in the country where she was meant to be working. Has all the proof she couldn’t get back there and had already been non resident for a year but the 60 days is well short and additional high 5 figure UK tax bill. We aren’t going to file yet in case any further concessions are given.

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By The Dullard
10th Jun 2021 15:29


Determining her non-residence status? She only spent 67 days in the UK. Unless she has three or more ties, she isn't UK resident. If she isn't UK resident, she's non-resident.

You don't add on exceptional days. Exceptional days are just days you don't count to work out how many days she spent in the UK.

Exercised corresponds to where the duties of the employment are performed. Why on earth do you think that somebody that isn't living here should be under a duty to contribute to this nation's coffers, but you don't need the DTA to tell you that, because it's in the UK's domestic legislation.

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By Tax Dragon
10th Jun 2021 16:18

I think you are trying to think 10 different thoughts at once. You men can't do that*, you know that, right? That's why your brain has melted.

Do what Dulls says and work out her residence status using the SRT. Plain ball. No funny bu99ers. Then everything follows.

* If that sounds like I'm extrapolating from personal experience... aka generalising... aka sexist... ok, you got me. Sorry. But it's true in your case too, innit.

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Replying to Tax Dragon:
By Hugo Fair
10th Jun 2021 17:34

Without elevating myself to be any kind of gender spokesman, and at the risk of badly misrepresenting the famous Eric Morecambe and Andre Previn sketch ...
... I can assure you that I'm capable of thinking considerably more than 10 different thoughts at once, but can't be held responsible for any lack of cogency when they are subsequently expressed.

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By SteveHa
11th Jun 2021 08:04

Thanks, all,

I think that there's some merit in TD's reply that I'm trying to bundle too many boxes into a bag at one time. I'll go back and just look at each in isolation.

You know how it is, sometimes you fall down a rabbit hole.

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