Why Compliance is now central to agency valuation

This is a guest blog by REC Business partner, SafeRec

For some recruitment agency owners, a long-term goal of building a business is  eventually selling the business.  But with HMRC’s new Joint and Several Liability (JSL) rules, compliance risks now extend far beyond operational challenges –  they directly affect the value and saleability of your agency. 

When liabilities can pass up the supply chain, buyers and investors will scrutinise compliance like never before. If there’s any doubt that your agency could be exposed to unpaid tax through an umbrella company, it doesn’t just threaten short-term profits - it can drag down your future exit value. 

The impact of JSL on agency sales 

Under JSL, if a supplier in your chain (for example, an umbrella company) fails to pay its tax, HMRC can pursue your agency for the shortfall. For potential buyers, that introduces a material risk: 

• Reduced sale price:  Valuation is often discounted when tax liabilities can’t be ruled out. 

• Deal delays or withdrawals: Extended due diligence may be required, or buyers may walk away altogether. 

Even a profitable, growing agency can find its value undermined if compliance is not watertight. 

What strong compliance looks like 

To protect both growth and future sale prospects, agencies need a framework that is independent, continuous and enforceable. This means: 

• Checking actual payslips, not just payroll summaries. 

• Verifying declared RTI liabilities against payments made to HMRC. 

• Ensuring contracts, onboarding and governance align with payroll operations. 

• Monitoring all engagement types — PAYE, PEO and CIS — without exceptions. 

• Acting fast and transparently when non-compliance is detected. 
   

Demonstrating this level of oversight gives buyers confidence that JSL risks have been anticipated and contained. 

Why SafeRec matters for agencies 

The most effective way to achieve this is by working with SafeRec Certified Umbrella Companies. Certification brings all of the above principles together into a single, enforceable framework. It was built by recruiters, for recruiters — with the very specific aim of protecting agencies against the risks that can destroy both trust and long-term value. 

On top of this, SafeRec provides agencies with a free platform to manage their umbrella partners, making it easy to conduct thorough due diligence and maintain full visibility of compliance across the supply chain. 

The bottom line 

With JSL in place, compliance is no longer a background process – — it’s a core driver of valuation. Agencies that work with SafeRec Certified Umbrella Companies can show prospective buyers they’ve already embedded independent, real-time oversight into their operations. And with SafeRec’s free agency tool, they can manage their umbrella partners with confidence. 

The agencies that take this approach won’t just avoid risk. They’ll strengthen client relationships, build trust with workers, and ultimately maximise the value of their business when the time comes to sell. 

Learn more about SafeRec