Darryn Lyons v The Commissioners for HMRC
[2023] UKFTT 294 (TC)
The Commissioners for HMRC v A Tax Payer
28 July 2023
[2023] UKUT 182 (TCC)
Upper Tribunal
Someone tried to avoid UK taxes by claiming they were only in the UK for a short time, but they really stayed longer because of family problems. A judge said those family problems weren't a good enough reason to avoid paying taxes, and they had to pay.
Key Facts
- •Taxpayer moved from the UK to Ireland on April 4, 2015.
- •Received approximately £8 million in dividends during the 2015-16 tax year.
- •Spent 50 nights in the UK during the 2015-16 tax year, exceeding the 45-day limit under the Statutory Residence Test (SRT).
- •Claimed that extra days were due to exceptional circumstances under SRT para 22(4) because of her twin sister's suicidal threats and inability to care for her children.
- •FTT allowed the appeal based on the care of the sister and children.
- •HMRC appealed the FTT decision.
Legal Principles
Statutory Residence Test (SRT) determines UK residency for tax purposes.
Finance Act 2013, s 218 and Schedule 45
Para 22(4) SRT: A day is ignored if the taxpayer would not be in the UK but for exceptional circumstances beyond their control preventing departure, and they intend to leave as soon as possible.
Finance Act 2013, Schedule 45, para 22(4)
The SRT's requirements are objective, not based on reasonable belief.
Analysis of Finance Act 2013, Schedule 45, para 22(4) and government consultation response.
'Exceptional circumstances' means unusual or uncommon, not necessarily unique.
R v Kelly [2000] QB 198
'Prevent' in para 22(4) means stopping something from happening or making an intended act impossible, not mere hindrance.
Financial Conduct Authority v Arch Insurance (UK) Ltd [2021] UKSC 1
Moral obligations alone do not constitute exceptional circumstances under the SRT.
Analysis of Finance Act 2013, Schedule 45, para 22(4)
Outcomes
HMRC's appeal allowed.
FTT erred in applying the statutory test, failing to consider each element daily, and incorrectly defining 'exceptional circumstances' and 'prevent'.
FTT decision set aside.
Insufficient evidence to support the FTT's conclusion that the taxpayer met the requirements of para 22(4) on a daily basis.
Taxpayer's appeal dismissed.
Taxpayer was tax resident in the UK during 2015-16.