COM80050 - Interest: how interest is calculated: negative credit interest

Where credit interest (Word 34KB) originally calculated and posted requires amendment downwards, negative credit interest will be posted on to the record. This can happen where

• Credit interest has been repaid for a CTSA AP and that AP is then superseded. The payments on which the credit interest was calculated on the superseded AP are reallocated to the new AP. Credit interest is therefore no longer due and is cancelled

• The Quarterly Instalment Payment (Word 42KB) (QIP) signal is changed from ‘N’ to ‘Y’ on the AP. Credit interest was originally calculated as though the AP was a non-QP case and all the tax was due by the normal due date (Word 49KB). When the QP signal is amended to Y then credit and debit interest is calculated from the quarterly instalment due dates

• Payments on which credit interest was calculated are subsequently reallocated and credit interest is no longer payable on these payments

• The AP is adjusted and the tax charge is increased

Negative credit interest is shown as a ‘minus’ credit interest posting in Function VPPD (View Payment and Posting details). Where the original credit interest was either reallocated or repaid then the creation of negative credit interest may leave the AP with a collectible balance in the amount that was reallocated or repaid. This amount does not attract late payment interest.

For a list of forms relevant to this subject, see COM80011.

For a list of functions to use in particular situations, see COM80012.

For legislation applying to this subject, see COM80013.