In Dorothy Johnson v HMRC [2021] TC08346, the First Tier Tribunal (FTT) dismissed a claim that a nurse’s salary paid during a university training period was non-taxable scholarship income. The individual had remained employed throughout and the payments were taxable earnings.

In 2003 Dorothy Johnson, a nurse, undertook a university course in midwifery under a hospital initiative to incentivise nurses to specialise.

The FTT dismissed the appeal:

Ms Johnson's employer denied her WATS repayment claim based on updated HMRC guidance issued six months after her application which clearly explained that employees who received a salary and employment benefits could not claim. The trust admitted that this had caused incorrect refunds to be processed for other individuals which were not required to be repaid.

Part of Ms Johnson’s appeal to the FTT was that there had been inconsistencies in processing repayment applications and the process was unfair. She also questioned the legality of HMRC guidance changes and of the PAYE deductions made from her income during the training period.

The FTT confirmed that it did not have the power to adjudicate matters of legality or fairness. Its function is to interpret legislation and the guidance relied on by Ms Johnson did not have the force of law. If the tribunal could and did allow her refund this would be perpetuating an error which it could not do.

Useful guides on this topic

Training and course fees
Can you receive tax relief on the cost of training? Can employees' obtain tax relief on training?

Training and course fees (self-employed)
Can a self-employed trader claim tax relief on their costs of training and on-going development? Are training fees capital by nature?

External link

Dorothy Johnson v HMRC [2021] TC08346 


Small acorn
If you like our content come and join us.

Thousands of accountants and advisers and their clients use www.rossmartin.co.uk as their primary TAX resource.

Register with us now to receive our receive our FREE SME Topical Tax Update & newletter