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Coronavirus: Twenty questions

Philip Fisher explores some of the more significant issues that have arisen out of the current COVID-19 pandemic and attempts to answer twenty questions on its effect on our lives and business operations.

19th Mar 2020
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Microscopic view of influenza virus cells
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I feel as if I have landed the middle of a bad sci-fi movie and there can only be one topic this week – my apologies. After all, coronavirus is all that anybody is talking about. Even the Budget has disappeared without a trace.

Since no one, including our government, has any definitive answers, it seemed most appropriate to ask some questions which should get readers thinking about their health, their wealth and their business interests.

The Biggest Issues

  1. What should I do? We are prudent accountants. Therefore, we like to play it safe.
  2. What does that mean? In most cases, we have probably already closed our offices, started working from home and trying to do as much as possible at long range.
  3. Do we need to go any further? Well, work is important, taking great care of the elderly and, one might suggest, withdrawing children from school should be high priorities.

Government Advice

  1. What is the government playing at? Within around a week, we have moved from washing our hands while singing happy birthday to trying to avoid contact with the world – unless you are a schoolchild.
  2. Is the nanny state really a good idea? In this case, surely something prescriptive would be desirable. If it is safe, we can behave normally and go to Cheltenham, the pub or the shops.
  3. What is the alternative? If this virus really is so dangerous, places of entertainment and schools should already formally be closed, as is happening in almost every other country and seems to have been effective in China.

Herd Immunity

  1. What about herd immunity? Have you read the statistics? To achieve this 60% of the population needs to catch the virus. If we really want that, why are we locking down the country and washing our hands? Surely, we should all be compulsorily handshaking and snogging?
  2. What would the consequences be? Accountants understand numbers. If 1 to 2% of about 40 million people die that is 400,000 to 800,000 funerals to attend.
  3. And the elderly? Much worse, if 20% of those age 70+ or with underlying health issues are at risk that means one in eight of the elderly will die to achieve herd immunity.

Conspiracy Theories

  1. Is this man-made? There are a couple of doozies doing the rounds.
  2. Have the Chinese/Russian/American/Iranians created a chemical weapon that went wrong? If true, then Houston, we have a problem.
  3. Has the climate change lobby set this up to reduce carbon emissions etc.? If so, let’s congratulate them as it has been pretty damned effective.

Investments

  1. What about my pension? Who knows? The financial markets seem to be behaving wholly irrationally. That may be because of automated bots but it is certainly worrying.
  2. Is this going to affect my eventual retirement? The experts are already suggesting that in the long term everything will get back to where it would have been.
  3. And those who are about to retire? This is one of those answers that will only become clear in the fullness of time. Arguably, taking your money out of the pension fund and putting it in the bank or under the bed could be the safest option but there has to be a bounce back at some point. At least there is no longer an obligation to commute your pension pot into an annuity on unfavourable terms.

Business

  1. Does my firm really need to close its office? At the moment, it seems as if the simple answer is “yes”.
  2. Can I claim anything in insurance? You will need to read any relevant policy. At least the government has asserted that their mealy-mouthed and vague statements do constitute a basis for making claims if the policies are drafted widely enough.
  3. What will happen to clients? At the moment, nobody has any idea. That probably includes the government. Unless drastic steps are taken, many businesses that were already teetering on the brink could go under, while some individuals may struggle to pay fees.
  4. And the profession? Some firms could go the same way if they are forced to pay costs for months on end without getting the usual levels of revenue.
  5. What should I do now? The best suggestion might be to stop and think. If you have clients in cash flow difficulties, send fees out and get cash in. Otherwise, make arrangements for you and your staff to work from home as effectively as possible while staying in contact with and supporting clients.

Good luck and don’t be surprised if there is a considerable amount more coverage on the subject over the next few weeks.

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By chronus
23rd Mar 2020 14:07

For those of us dealing with micro and small businesses, the unknown today is whether working-owner-directors of our small incorporated clients will be eligible under the Coronavirus job retention scheme.
Should they be excluded for reason of lack of wages, we would have all shot ourselves in the foot for having gone along the dividend route. But hindsight is such a rare commodity.

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