A new licensing regime introduced under the Scrap Metal Dealers Act 2013 (the Act) means tougher regulation of the scrap metal industry.

Metal theft has seen a sharp increase in recent years, with thieves targeting communication and power lines and even commemorative plaques in graveyards. As the cost to councils continues to rise, the Act seeks to target this harm through tighter control of any business involved in metal.

What is the new regime?

Under the Act, it is now an offence to carry on business as a scrap metal dealer without a licence. Not having such a licence is not simply a case of not having the correct paperwork; significant penalties will attract for breaches of the new provisions for businesses and individuals.

Organisations operating without a licence currently risk a fine of GBP 5,000 and/or site closure. Furthermore, directors, managers and other senior members of the business could also be prosecuted if they consented or connived to the commission of the offence by their business.

The activities of dealers will also be subject to greater scrutiny under the Act. For example, it is an offence if a dealer fails to keep detailed records in relation to the receipt and disposal of scrap metal and an offence to pay for scrap metal with cash. This information must be kept for a period of three years from the date which the metal is received.

The new regime is administered by Local Authorities, whose officers may enter and inspect a licensed site at any reasonable time on notice to the site manager. Businesses should therefore remain alert to such visits.

Does my business fall within it?

So what is a "scrap metal dealer"? The definition under the Act is far wider than may be expected.

It includes companies that "wholly or partly buy and sell scrap metal whether or not the metal is sold in the form in which it was bought". This means that a company which sells left over metal cuttings or empty oil drums may be a scrap metal dealer even if their main business is something completely different.

As the Act is has not yet been tested in the Courts, there is still scope for interpretation of some of the provisions, particularly in relation to by-products, and there may be arguments that certain materials are properly exempt from the provisions of the Act. However, businesses are advised to err on the side of caution when considering if they fall within the scope of the regime.

What steps should my business take?

If a business decides that it does need a licence it will need to consider which Local Authority to apply to and what type of licence is required.

The two main types of licence are:

  • Collector licence: this allows a licensee to operate as a collector in the area of the issuing local authority but a licensee is not entitled to operate a site.
  • Site licence: with this, a licensee can transport scrap metal to and from sites from any local authority area. Site licences must specify where a scrap metal dealer carries on business and a site manager must be named for each site.

It is important to note that a dealer cannot hold both a site and a collector's licence in the same local authority. Licences are likely to cost GBP 500-GBP 1000 each and will last for three years.

With stricter controls now in place to monitor this growing area, businesses are advised to become familiar with the new regime before buying, selling or disposing of scrap metal to ensure that they do not fall foul.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.