Retrospective Review Claims: “Can anyone tell me, if I’m claiming back money and interest, what would be the interest rate I should be claiming?”
Thank you Dawn for raising this topical question on our Facebook recently.
If you have made a retrospective claim against your local Clinical and ‘won’ – ie you have been found eligible for NHS Continuing Healthcare Funding (CHC) – you are entitled to be repaid the care home fees for the period awarded PLUS interest by way of reimbursement.
Your entitlement to interest is set out in the NHS Continuing Healthcare Refreshed Redress Guidance which is designed to help Clinical Commissioning Groups (CCGs) to pay appropriate redress when settling claims where individuals have retrospectively been found eligible for CHC Funding.
The Refreshed Redress Guidance maintains the long-established principle that “where maladministration has resulted in financial injustice, the principle of redress should generally be to return individuals to the position they would have been in but for the maladministration which occurred.”
Each matter is case specific. The Redress Guidance state that the CCG should consider the specific circumstances and merits of each case, individually, when determining the appropriate level of redress.
The Refreshed Redress Guidance recommends that the Retail Price Index (RPI) is the appropriate interest rate to apply to redress in relation to eligibility decisions which are made with effect from 1st April 2015.
Redress is about placing individuals in the position they would have been in had NHS Continuing Healthcare been awarded at the appropriate time. For example, instead of paying care fees, those funds could have been invested elsewhere and earned interest. The Redress payment therefore seeks to put the individual back to that position, but for the CCG’s maladministration.
‘Maladministration’ is not defined, but generally includes things like: inordinate delays by CCGs in processing retrospective claims; poor or wrong decision making – perhaps erroneously closing a claim prematurely based on misconceptions or rejecting an application for CHC on incorrect grounds; rejecting a claim as a result of applying the assessment or appeal criteria incorrectly; unsound, unfair or improper decision-making; mis-application of the National Framework for NHS Continuing Healthcare Funding; incompetence or abuse of process.
The Refreshed Redress Guidance, updated in 2015, presumably intended to reflect current interest rates – potentially saving CCGs millions of pounds in wasted interest – and reducing their exposure for previous maladministration – spanning back over many years prior. The new Guidance provided that any outcome decisions made after 1st April 2015 are to be paid at RPI rates.
For outcome decisions made prior to 31st March 2015, interest was payable at the far higher County Court statutory rate of 8% per annum (even though no court proceedings were in contemplation).
On some older cases, whether due to CCG delays, the need to appeal flawed decisions or other ‘maladministration’, it was not uncommon for the amount of interest to be almost as much as the actual sum to be reimbursed! This could be eye-watering sums in larger cases, which to the CCG’s shame, could have been saved purely by carrying out fairer, quicker and more robust assessments in the first place.
You can access the Refreshed Redress Guidance here to see how the CCGs deal with restitution and interest: https://www.england.nhs.uk/wp-content/uploads/2015/04/nhs-cont-hlthcr-rdress-guid-fin.pdf
Methodology applied for calculating interest
Most CCGs will prepare their restitution calculation (including interest payable) for your agreement and approval prior to making payment. However, some CCGs just prepare all their workings and send out confirmation of their interest calculation with notification that payment is being processed – fait accompli – and without the need for prior approval.
Not all CCGs use exactly the same methodology when preparing their RPI interest calculations and much depends on their particular financial model. Some CCGs work out the RPI increase percentages on a month-by-month basis for a more precise and detailed calculation – our preference for shorter periods of restitution. This can involve lots of smaller calculations to derive the cumulative sum repayable each month. Others may take a more broad-brush approach in accordance with the Refreshed Redress Guidance, and simply take the average annual RPI figure for each year of restitution – which is far simpler and quicker and involves far fewer calculations.
Generally, whichever method or computerised formulae a CCG adopts, the overall outcome may not be significantly different and worth the hassle of challenging it. It could work to your detriment in some cases and, of course, there is the possible risk that it gives the CCG an excuse to delay payment whilst they investigate your challenge and respond.
So, unless the CCGs calculation is manifestly flawed or obviously incorrect, it is unlikely that you will persuade the CCG to change their tried and tested ‘in-house’ methodology if they have a set way of calculating RPI. But we would still strongly recommend that, at the very least, you should check their figures to ensure that they are correct mathematically and no obvious accounting error has crept in. For example, the CCG has calculated restitution on the wrong period of eligibility, or their mathematical additions are wrong.
How to calculate RPI interest post 1st April 2015
This is the complicated bit for the mathematically challenged!
Your starting point is the Retail Price Index available from the Office of National Statistics http://www.ons.gov.uk/ where you can access the monthly RPI rates each year.
In simple terms, calculating RPI is done by taking the applicable RPI rate at your chosen start date (A) and deducting it from the end date of your calculation (B) and multiplying that percentage increase by the amount of restitution payable.
Here’s a fictitious example to show you how RPI works:
Mr D’s assessed period of CHC eligibility say: 1st January 2013 to 31st December 2013
Mr D paid £5,000 per month care fees, therefore total restitution sum payable is: £60,000
(A). Average RPI rate for 2013 is: 250.1
(B). RPI rate November 2020 is: 294.3
Percentage increase over this period: (B) 294.3 – (A) 250.1 = 44.2, divided by (A) 250.1 x 100) = 17.67%
Total interest payable therefore is: 17.67% x £60,000 = £10,602
Total restitution payable; £70,602
By comparison, so that you can appreciate the difference, if interest was calculated at 8% per annum under the old Redress Guidance (pre 1st April 2015), the interest figure would be £32,612.60 as at today’s date, making a total restitution sum of £92,612. 60. A significant difference of £22,010 when compared to the RPI figure of £70,602! That’s why CCGs are so keen to impose interest at RPI rates on older cases pre 1st April 2015, regardless of whatever maladministration and perverse outcomes they may have decided.
Can I still argue for 8% interest for Pre 1st April 2015 outcomes?
No, not if your retrospective case started after 1st April 2015 and the outcome decision is also made after this date.
If your retrospective claim started just before this date – say within a year or two, it is highly unlikely that you will succeed with your argument. The CCGs must be allowed a reasonable time to investigate and then adjudicate on retrospective reviews. In our opinion, any claim started in 2013/14 is unlikely to find favour with the CCG – unless you can prove gross maladministration (e.g. inordinate delay and incompetence).
But what can you do if you have a much older retrospective claim that started well before 1st April 2015, say in 2011/12 and have now been found eligible for retrospective funding in 2020? Yes, there are some very old cases still being decided even now! You should argue that, had the CCG carried out a fair and proper assessment at the time, your relative would have been found eligible for CHC Funding and had all their care fees paid by the NHS. Therefore, interest should rightly be paid at the rate applicable at the time ie 8% per annum.
The CCG will inevitably argue strenuously against this. They will always contend that, because the ultimate outcome decision was made after this date (in our example 2020), interest is payable in accordance with the current Refreshed Redress Guidance at RPI rates. As far as we know, CCGs will simply not entertain any arguments over 8% – even on very old retrospective claims – as it’s clearly not in their interests to do so. There is an obvious risk that the ‘floodgates’ will open, and their resources will be exposed to multiple claims and large pay-outs. So, despite delays, errors and flawed decisions etc – often forcing claimants to use life savings or sell their home to pay for care – CCGs can hide behind their trump card – the Redress Guidance – and effectively get away with paying lower interest. Families may well feel aggrieved that RPI is inadequate compensation for the years of stress, anxiety, frustration, anger and misery caused fighting for their relative’s entitlement for CHC and ultimately succeeding in their mission.
If you remain dissatisfied with the CCG’s refusal to entertain interest at 8% on claims launched pre 1st April 2015, you can complain to the CCG. Ask for the complaints email and contact details if you cannot find them online.
Making your complaint
- Set out a concise chronology of events (with dates) as evidence of maladministration.
- Specifically refer to any outcome decision from an appeal panel (eg NHS England) which criticises the CCG’s rationale to refuse CHC Funding as being unsound or not robust.
- Don’t forget to point out that, had the CCG correctly assessed your relative in a robust manner at the outset, the decision would have been made before 1st April 2015, and that entitles you to interest at the previous rate of 8%.
However, don’t be surprised if the CCG hold their ground and reject your complaint out of hand. They have too much to lose by agreeing with you. Unfortunately, your chances of success are very slim to non-existent! There will be no further discussion to be had with the CCG and they will simply suggest that you complain to the Parliamentary and Health Service Ombudsman (PHSO). You can download the complain form online: https://www.ombudsman.org.uk/making-complaint/complain-us-getting-started/complaint-forms
Can I sue the CCG for 8% interest?
CCGs are not obliged to pay 8% under the Refresh Redress Guidance, post 1st April 2015 and the best you will get is RPI – so don’t waste your time even trying.
As far as we are aware, there is no legal basis either for suing the CCG for 8% under the previous Guidance in force pre 1st April 2015. The Redress Guidance is designed to put the individual back to the position they would have been in but for maladministration, but this is at the CCG’s discretion, and although expected, is not law. So, there is no legal entitlement to bring a claim.
Can the CCG withhold tax from my interest?
At present CCGs are mandated by HM Inland Revenue and Customs to withhold tax at 20% on the interest element payable (e.g. 20% x £10,602 in our example above). CCGs are holding this money to the claimant’s order, pending the outcome of this ongoing dispute with HMRC. CCGs rightly say that the full amount of interest belongs to the individual, whereas HMRC argue that, pursuant to the Income Taxes Act 2007, basic rate income tax is payable on the interest received. We take the firm view that interest is for compensation and not income, and therefore, like all other forms of compensation, should not be taxable. The dispute continues, but in the meantime, CCGs are obliged to hold back the taxable element in case it has to be paid to HMRC. If, however, CCGs are successful in their appeal, they will pay individuals the balance of their restitution monies.
How long should it take to get paid?
How often do we hear of CCGs doing their restitution calculations slowly, and then delaying payment once the figures are agreed? This is scandalous! Once the calculation is agreed, payment should be made within a reasonably short time. We would consider a maximum of 30 days to be an acceptable timeframe. Some organised CCGs are paying promptly within 7 to 14 days; yet others are taking 3 to 6 months – which is manifestly frustrating and unfair! First the CCG incorrectly assesses your relative for CHC Funding, then take their time processing payment. If this happens to you, we recommend that you complain and press for prompt payment.
Quote the Refreshed Redress Guidance which states: “It is important that once an eligibility decision for NHS Continuing Healthcare is reached, CCGs should promptly pay any redress sums owed to individuals or their representatives. Disputes about aspects of the redress payment or other aspects of a case should be dealt with subsequently.”
So, if there is any dispute over 8%, make sure the CCG pay you first what they say they owe at RPI rates, whilst you continue to argue for the higher rate. Don’t let the CCG fob you off and delay making payment whilst they deal with the whole argument and drag things out even longer!
Here are some useful links:
Retail Price Index are available from the Office of National Statistics at: http://www.ons.gov.uk/
The contact details for the Office of National Statistics at: http://www.ons.gov.uk/ons/site-information.
Refreshed Redress Guidance: https://www.england.nhs.uk/wp-content/uploads/2015/04/nhs-cont-hlthcr-rdress-guid-fin.pdf
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Hi, Just wondering if any one can help with this my question regarding interest payments.
In Aug 2018 after a CIN DST, funding was removed and mum had to self fund.
After going through all the appeal process , in Sept 2022 I finally won and mum should have been CHC funded. This is now a retrospective claim as mum passed away 22/05/2020.
I have had a redress offer for the period 09/08/2018 to 22/05/2020 with interest added, this is on the payments she made to the care home. Should there be some interest for the period 22/05/20 to Sept 2022, as I couldn’t make a redress claim until I won the appeal in Sept 2022. I have got back to the NHS involved but they say it’s a fair offer and won’t budge, and to contact the Parliamentary Ombudsman I’m not happy with their decision . Just want to know if it’s worth fighting for or is it only on payments made.
Regards Sue
Hi Sue,
I am trying to understand your main concern.
Q- Have you received compensation back from the NHS with interest , but the interest part had been taxed at source at 20 percent ? So you want to know if you can claim that taxed interest part ?
Dear Sue,
The basic principle under the NHS Redress Guidance is that the ICB are obliged to put you back to the position you would have been in, but for their maladministration ie reimburse your losses, including interest.
In answer to your query, therefore, you are entitled, as of right, to be paid interest on the restitution sum to be awarded during the period of eligibility 09.08.18 to 22.05.20.
Interest on the monies to be reimbursed continues to accrue from the date of the first payment (eg if on 09.08.18) and is usually calculated up to the date the ICB’s offer letter (or thereabouts) is sent to you (NOT the date you are notified of the successful outcome eg September 2022). So, if that offer letter is in May 2022 or 1st September 2023, or indeed any date inbetween or after, that should be the end date for calculating interest.
Ordinarily, you will be asked by the ICB to provide proof of care fees paid during the period awarded so they can calculate the sum to be reimbursed to you.
The ICB will then prepare their own calculation as to the principal sum to be reimbursed for care fees during this period (ie 09.08.18 to 22.05.20) and should make you an offer in writing for your acceptance. The offer should be accompanied by a detailed calculation to include interest payable to date, so you can see how they have derived their offer.
NB: Some ICBs don’t make a formal offer, but will send you their calculation for information purposes and just process payment automatically.
Each ICB works out their interest calculation slightly differently, and it can take some time to check their methodology and workings. Don’t be shy to ask them to explain it if you are unsure about their figures.
But in principle, the award should attract interest to the date of their calculation i.e beyond the outcome letter in September 2022.
So, the longer it takes the ICB to calculate the monies to be reimbursed, the more interest they will have to pay! Sometimes, the additional interest accrued on lengthy older periods can be staggering.
Here’s are links to some useful articles for further reading around the matter:
https://caretobedifferent.co.uk/this-blog-looks-at-various-issues-arising-out-of-a-successful/
https://caretobedifferent.co.uk/retrospective-claims-for-chc-claiming-interest-and-tricks-of-the-trade/
https://caretobedifferent.co.uk/retrospective-review-claims-claiming-interest/
If you need help, do get in touch.
Hi,
I started a claim against Wakefield CCG in 2012 and after 2 appeals, an independent review and 2 complaints to the Ombudsman The CCG have agreed to pay interest at the 8% CCJ rate on my full claim. They originally made payments to me at each stage as they failed to reach the correct decision and paid the CCJ rate on the first payment in 2014 but only the lower RPI rate on the second and third payments which were both made before 5th April 2018.
As a result of HMRC’S assertion that such interest is taxable as from 2018 I have told the CCG that if NHS England lose their tax appeal I will end up paying tax on the interest adjustment that is now due which I would not h as be been liable for had they reached the correct decision back in 2014 and paid me in full at that time and in this event I would expect them to make a further ex gratis payment to cover any such tax liability.
Obviously they do not accept my claim and they have stated that such interest has always been taxable and the only thing that has changed since 6th April 2018 is that the CCG has to deduct 20% tax from any interest payment they make. I have emailed NHS England for clarification but they have said the same thing but I believe that they are both incorrect and that any such interest paid before 2018 was not considered to be taxable on the recipient.
Can anyone confirm the tax treatment of such interest paid before 2018?
Many thanks
Ken Bramwell
A brilliantly informative article. This time last year I was struggling to bring this information to the attention of a CSU who seemed mostly ignorant about the Refreshed Financial Guidance, the equitable remedy of Restitution, and the need to pay promptly. I had to issue legal process to prompt payment before they transferred the sums due.
A brilliant article and one that I need 12 months ago as I sought to get answers from my CCG regarding restitution of my late father’s fees. It was over 4 months before they paid up! I was shocked at the lack of knowledge that the CCG administrators and even the managers had when answering my questions about this important issue. This article is clear, informative and will undoubtedly help those struggling to get answers from CCG’s. I pushed for the 8% rate but failed to get anywhere. My questions about the 20% held for HMRC were ignored, but I persisted until I got an answer from their fiance department, that bluntly told me to claim it from HMRC using the Form R40, which I downloaded and completed. I was successful in reclaiming the 20% that had been withheld. I hope that I never have to have dealings with my CCG/CHC again. They were incompetent! I had NO help from them in how to navigate this incredibly difficult process. This is where I commend CTBD for sharing their expertise and empathy with those struggling to understand the process! Hats of to CTBD! Keep up the good work.
Thanks Michelle! Kind regards
Hi Michelle – our claim was settled in 2018 but the 20% tax was witheld – I assumed the local CCG were holding this money so I was wondering who paid the 20% back to you and how straightforward was form R40 to complete
Regards Mark
Mark,
Did you manage to get a R40 application approved?
What was their postal address?
I have two to submit for my deceased parent:-
a) Fast track overpayments which should NOT be considered CHC funding redress payments, as the patient DID meet the CHC criteria. ( as you may know that when patients meet Fastrack criteria, care homes or the CCG do not (intentionally?) inform the family’s to stop paying for the care fees), and
b) the 20% taxation on a NHS England CHC Restitution Award .
FYI:
I pushed the tax office years back for a taxation refund and they had stated no. As it had been due to rule: SAIM9078 :-
https://www.gov.uk/hmrc-internal-manuals/savings-and-investment-manual/saim9078
Which is based on Savings and investments for commercial business transactions, and not personal taxation matters, which should be addressed through the normal self assessment process.
Also:
Since tax year 2016, every individual is entitled to £1000 a year tax fee amount on their savings, before declaring they had more than that. Disparity in a word.
The tax office would not listen to my arguments.
PS: there is a HMRC tax tribunal still to be heard on this taxation ruling. Don’t hold your breath, giving this taxation imposed on the CCGs to tax patient awards, started in year 2007, and has still not been resolved.