The concept is simple - if you pay late you pay penalties / interest.
With BT the application is simple too - it is just interest, and based on how much and how late. Simple. Well, it should be.
The issue is that they make lots of mistakes, and the terms allow us to withhold payment of disputed amounts, so we do.
Lets invent an example...
Lets say our January bill is £1100. But £100 of that is wrong, and disputed, so we pay £1000 and dispute £100.
Months later BT finally agree the dispute, and give a credit, lets say on July's bill. So the July bill normally £1000, is less the £100 credit so is only £900.
But as the dispute is finally resolved we need to pay the full £1000 for the July bill, as we have already taken the £100 off our January bill payment. Paying only £900 in July would be withholding the dispute twice.
The issue is that BT get the £1000 payment for July, but the bill is only £900. So they allocate £900 to July, and allocate £100 to the old "under paid" January bill.
Then they decide that £100 of the January bill was paid 6 months late and work out late payment for £100 for 6 months.
Of course, this creates a slight vicious circle, as we are now disputing the late payment charges, and, as per the contract, withholding payment for those charges. BT will take months to even understand the problem with these charges and so take ages to resolve that dispute before applying a credit. Rinse, repeat.