More than half a million more people failed to file their Self Assessment tax returns before 31 January compared to last year, according to new research.

Almost one in five (19%) of the 12.2 million Self Assessment tax returns due on the annual submissions deadline have not yet been received by HM Revenue & Customs, an increase of 27% versus last year, according to analysis by The Accountancy Partnership.

The rise in complacency in filing returns may be in part due to HMRC waiving late filing and late payment penalties for Self Assessment taxpayers for one month due to the pandemic and other pressures on business owners, such as surging energy prices, recruitment challenges and rising inflation.

However, despite the month-long reprieve, late filers will still have interest applied to their outstanding balances from 1 February, so there will still be financial consequences. Business owners have until 1 April to pay their tax bill or set up a payment plan to avoid a late payment penalty.

The Accountancy Partnership, the online accounting services provider found that more than 2.3 million people missed the deadline in 2022 compared to almost 1.8 million in 2021, while 12.2 million Self Assessment returns were due this year following the start-up boom during the pandemic, which saw a record number of businesses started.

Accounting experts are now urging business owners to complete their returns as soon as possible to avoid further financial penalties.

Lee Murphy, Managing Director at The Accountancy Partnership, said: “Business owners are under immense pressure currently; however, they should always try to meet official government deadlines to avoid incurring penalties. The month-long penalty waiver isn’t a deadline extension, and interest on payments owed will still be charged. Therefore, organising and paying any money owed is important. We’ve seen a record number of businesses incorporated over the last 24 months, meaning it may be the first time that many have been required to file a Self Assessment. Also, billions claimed in Coronavirus grants and government schemes now have to be accounted for this financial year adding further complexity to returns.

“Anyone struggling with their Self Assessment return should seek professional support as soon as possible. Although the deadline has passed, accountants and finance professionals remain busy, and many do not necessarily have the capacity to help immediately. Getting support and advice as early as possible is key to reducing the chance of incurring further penalties and interest payments.

Recent research into the mental health of small business owners found financial fears have led to sleepless nights for almost a third (30%) of SME owners in the past 12 months. Unsurprisingly, two-thirds (69%) of small business owners – approximately four million people – reported the pandemic has had a moderate to severe impact on their mental health.

Worryingly, just one in 10 (12%) of those SME owners who have experienced issues sought professional help.

For support on Self Assessment or any other business finance matter, and to read the full SME Business Owner Mental Health report, visit https://www.theaccountancy.co.uk/mental-health.