Statutory Residence Test: First-tier Tribunal applies a commonsense approach to the transit and exceptional circumstances exceptions

The First-tier Tribunal has allowed an appeal by Michael Parker, a Chartered Engineer working in Iraq, against HMRC’s assessment that he was UK tax resident for the 2019/20 tax year, holding (in Parker v HMRC [2026] UKFTT 00652 (TC)) that both the transit exception and the exceptional circumstances exception of the statutory residence test applied.

Background

One of the key factors in determining an individual’s liability to UK tax is their residence status, determined under the Statutory Residence Test (SRT). The SRT works by mechanically counting the number of days (meaning midnights in the UK) an individual is present in the UK in a particular tax year and applying that number against certain conditions. However, certain days may be disregarded, including under the transit exception and the exceptional circumstances exception.

The transit exception applies where:

1. the individual arrives in the UK as a passenger;
2. leaves the UK the next day; and
3. between arrival and departure does not engage in activities that are to a substantial extent unrelated to the individual’s passage through the UK.

The exceptional circumstances exception applies where:

1. the individual would not have been present in the UK at the end of the day but for exceptional circumstances beyond the individual's control that prevent the individual from leaving the UK; and
2. the individual intends to leave the UK as soon as those circumstances permit.

Mr Parker was present in the UK at the end of 100 days during the 2019/20 tax year. HMRC accepted that seven of those days could be disregarded due to the application of a specific exception relating to Covid-19 but disputed Mr Parker’s claim that a further three days qualified under the transit exception and that the exceptional circumstances exception applied to one other day. The dispute was important: if Mr Parker’s arguments succeeded, his UK day count would be sufficiently low to remain non-UK resident, whereas if the Tribunal agreed with HMRC, he would be UK resident under the SRT for the tax year in question.

The transit exception

On three occasions during February 2020, Mr Parker arrived at London Heathrow Airport from overseas, stayed overnight at a nearby hotel (eating all meals either in the hotel or at Heathrow Airport), and flew out the following day to his next destination. Mr Parker argued that the transit exception applied on all three occasions, but this was disputed by HMRC. 

Since Mr Parker's employer was willing to book and pay for flights between Iraq and Heathrow Airport, whereas Mr Parker was responsible for any onward flights to holiday destinations, he held separate tickets for each leg of the journey rather than a single through-ticket. HMRC argued that this meant that the UK was his final destination on each occasion and he was therefore not a "passenger" within the meaning of the legislation. However, the Tribunal rejected this, finding nothing in the legislation requiring a single ticket in order to qualify as a passenger. 

HMRC also contended that, since Mr Parker met his wife (and, on one occasion, his stepdaughter) at the airport hotel, this constituted activities "to a substantial extent unrelated to his passage through the UK". However, the Tribunal disagreed, holding that these family members were travelling with Mr Parker on the next leg of his journey and so their presence was directly related to his onward travel. It should, however, be noted that the Tribunal accepted that “had he met with friends or family 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”.

The exceptional circumstances exception

On 29 February 2020, Mr Parker's flight from Heathrow to Dublin was cancelled after boarding due to the closure of Dublin Airport caused by Storm Jorge. HMRC argued that adverse weather and flight cancellations are not "exceptional" and that Mr Parker was not truly "prevented" from leaving the UK because he did not attempt to find same-day alternative transport once conditions improved — including by flying to a non-UK destination other than Dublin — despite the fact that his luggage remained checked-in with the airline and the airline had arranged to rebook him on a flight to Dublin the following day. 

Applying the framework set out by the Court of Appeal in A Taxpayer v HMRC [2025] EWCA Civ 106 (on which we have previously commented), the Tribunal found that the cancellation of a flight due to a named storm causing widespread airport disruption was indeed exceptional, being "out of the ordinary course, unusual, and not regularly or normally encountered". Importantly, the Tribunal took a practical approach to the question of prevention, holding that Mr Parker was not required 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”.”

Decision

The Tribunal accepted that both the transit exception and the exceptional circumstances exception applied to the days in dispute, meaning that all four days could be disregarded for the purposes of the day counting test under the SRT. Mr Parker was therefore non-UK resident during the 2019/20 tax year.

Comment

The fact that a case involving facts as seemingly straightforward as these ended up before the Tribunal is indicative of the approach that HMRC are taking when applying these aspects of the SRT and suggests that, despite their recent defeat in the Court of Appeal in A Taxpayer v HMRC, HMRC remain determined to interpret these exceptions as restrictively as possible. However, the Tribunal's commonsense approach is reassuring for taxpayers who may have cause to rely on the transit exception or the exceptional circumstances exception. 

Whether HMRC will appeal this decision remains to be seen. It is worth noting that, at the time of publication of this article, HMRC’s guidance on the SRT still states that “travel problems, for example a delayed or missed flight due to traffic disruption, train delays or cancellations, or a car breakdown, will not be considered as exceptional circumstances”. Accordingly, the safest course of action for internationally mobile individuals remains to keep a sensible number of days in reserve as a buffer against accidentally becoming UK tax resident under the SRT, so that unexpected events do not require reliance on these exceptions.