You've got it more or less spot on marioair.
It won't make any difference to the process if you let the licence lapse, but if you don't renew your IMC before you apply that will go on the back of your licence. Then, when you do renew it, the CAA will charge you £89 (currently) to put it on the front with your other privileges. The forms and certified copies you need will depend on how you apply and whether you have level 6 english proficiency.
I've helped many with this process at Elstree. Send me a pm if you think I can help you.