Payments made while training were earnings

In 2001 the taxpayer a qualified nurse began a midwifery course under an NHS initiative to incentivise registered nurses to specialise.

The hospital trust continued to employ her during her course to ensure that she maintained the same rate of pay while she was training as she would have as a registered nurse.

In 2017 soon after she retired the taxpayer claimed a refund of tax and National Insurance paid during her training under the widening access training scheme (WATS) on the basis that the salary and living expense payments she received during the training period were non-taxable scholarship income (ITTOIA 2005 s 776) and therefore exempt from National Insurance.

She initially applied to the hospital but it refused saying she was not eligible because she remained an employee of the hospital receiving a salary rather than a training or scholarship bursary. The taxpayer...