Step 3 Choose your debt solution – Common priority debts 3 What can I do? If you have CMS arrears, use the Summary budget for creditors to make an affordable offer towards them. Keep paying your ongoing maintenance as well. If you have a change in circumstances, such as a drop in income, let the CMS know. Ask the CMS to work out your new maintenance payments. Tax debts Why are these a priority? Income tax and National Insurance (NI) arrears are a priority debt because HM Revenue & Customs (HMRC) can take the following action. • Change your tax code so it can take money from your wages. • Use bailiffs to try and take your goods. • Take money directly from your bank account if you owe at least £1,000. • Use the magistrates’ court if you owe less than £2,000. • Ask the court to make you bankrupt if you owe at least £5,000. VAT Many of the recovery options listed can also be used for VAT debts. Some NI arrears can also affect whether you are eligible for certain benefits. If HMRC threatens to make you bankrupt, contact us for advice. What can I do? Contact HMRC as soon as possible. Use the Summary budget for creditors to make an affordable offer. HMRC may ask you to pay more than you can afford. If so, explain that you are offering all that you can and start making payments. If you are in a vulnerable situation, for example, someone close to you has recently died, you are dealing with mental health issues or are elderly or sick, let HMRC know. HMRC should look at your individual circumstances and may be more flexible in how it recovers the debt. You may not agree that you owe the debt to HMRC. If you have been unable to sort out the matter with HMRC, you may need specialist advice. If you are on a low income and can’t afford professional advice, contact TaxAid. Go to www.taxaid.org.uk, or call 0345 120 3779 for more information. For more information, see our Business debts fact sheet. Page 63