SolvedCOM80050 | Interest: how interest is calculated: negative credit interest
From HM Revenue & Customs · COTAX Manual
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Where credit interest originally calculated and posted requires amendment downwards, negative credit interest is posted on to the record. This can happen in the following situations:
credit interest has been repaid for a CTSA AP, and that Accounting Period (AP) is then superseded. The payments on which the credit interest was calculated on the superseded AP are reallocated to the new AP.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’ (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. When the ‘QIP’ signal is amended to ‘Y’, 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.
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