Recruitment agencies charge 25% of a £650/day contractor's rate — that is £42,250 per year in fees for a single placement. This guide shows you how to hire directly, verify properly, handle IR35, and protect both sides — for a fraction of the cost.
An agency's core service is: find candidates, screen CVs, arrange interviews, and make an introduction. For this they charge 25% of contract value indefinitely. Everything they do, you can do yourself — with the right tools and a clear process. The one thing most businesses lack is not access to candidates. It is the verification, contract, and payment infrastructure that sits around the hire. That is what this guide provides.
⚠️ The IR35 problem: since April 2021, medium and large businesses (and some small businesses) are responsible for determining the IR35 status of every contractor they engage. Getting this wrong means HMRC can pursue the business — not the contractor — for unpaid tax and National Insurance. This guide includes the IR35 determination checklist.
Before you look for anyone, define exactly what you need. A statement of work (SOW) specifies: the deliverable or role, the duration, the day rate or project fee, where the work is performed, who the contractor reports to, and what success looks like. A clear SOW is what separates a professional engagement from an informal arrangement that creates employment risk. Bundle IQ generates a compliant SOW template as part of every contractor engagement.
LinkedIn is the most effective direct sourcing tool for contractors. Search by skill, location, and "open to contract work." Post the role on your company page. For trades and specialist labour, sector-specific job boards (Totaljobs, Indeed, CV-Library) charge a flat fee of £100–£250 for a 30-day listing — versus unlimited agency fees. Your network is also underused: a post asking for referrals typically surfaces 3–5 credible candidates within 48 hours at zero cost.
This is the step most businesses skip — and where problems occur. Before engaging any contractor, check all of the following:
Bundle IQ runs all seven of these checks automatically on every contractor in our marketplace — Companies House, Insolvency IIR, Gas Safe (where applicable), FSA, TrustMark, Charity Commission, and OFSI. No manual checking required.
IR35 determines whether a contractor should be treated as employed (inside IR35) or genuinely self-employed (outside IR35) for tax purposes. If you get this wrong and HMRC disagrees, you — the engaging business — are liable for the unpaid tax and NI.
Use HMRC's own CEST tool (Check Employment Status for Tax) at gov.uk/guidance/check-employment-status-for-tax. Answer every question honestly. Keep a record of the determination. The key factors HMRC looks at:
If the engagement is inside IR35, you must deduct tax and NI from payments as if they were an employee — even though they are not on your payroll. Get specialist HR or tax advice if unsure.
Bundle IQ runs an IR35 determination as part of every contractor engagement. The determination is documented, timestamped, and attached to the engagement record. If HMRC ever challenges the status, you have a contemporaneous written record of the determination — the single most important piece of evidence in any IR35 dispute.
Every contractor engagement needs a written contract specifying: the parties, the deliverable or role, the start and end date, the day rate or project fee, payment terms, IP ownership (who owns work created during the engagement), confidentiality, termination notice, and IR35 status. An email saying "great, see you Monday at £650/day" is not a contract. It gives you no mechanism to enforce delivery, claw back payment for non-delivery, or protect your IP.
Bundle IQ generates a compliant contractor agreement as part of every engagement — reviewed against standard UK contract law and including IR35 status documentation.
The most common dispute in contractor engagements is payment — either the business delays payment, or the contractor delivers incomplete work and the business withholds payment. IQ Protection solves this for both sides: payment is held in escrow when the engagement starts and released to the contractor when the milestone or project is confirmed complete. The contractor knows the money is there. The business knows delivery is required before release. No disputes, no chasing invoices.
A business engaging 5 contractors per year at £650/day on 6-month contracts pays £203,125 in agency fees under the current model. Through direct hiring with Bundle IQ's HR & Labour marketplace, the equivalent cost is £81,250 — a saving of £121,875 per year. The contractors receive the same pay. The agency receives nothing. The business reinvests the difference.
Every contractor is Companies House verified, insolvency checked, and sanctions screened. IR35 determination, formal contracts, and IQ Protection escrow included on every engagement.
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