FREE CHAPTER from ‘A Practical Guide to the Scrap Metal Dealers Act 2013’ by Mariel Irvine



Who is a scrap metal dealer?

There is more than one question to be answered when considering the definition. The first step is to consider what “scrap metal” is. Section 21(6) of the Act defines it as including:

(a) any old, waste or discarded metal or metallic material,

(b) any product, article or assembly which is made from or contains metal and is broken, won out or regarded by its last holder as having reached the end of its useful life.”

This appears to be a satisfactory and self-evident description encompassing what scrap metal is and those items past their useful life that may contain scrap metal. However, it is not an exclusive definition. It is an inclusive one. The parliamentary draftsmen wanted to retain room for manoeuvre. An item may fall outside the strict definition and still fall within the meaning of scrap metal for the purposes of the Act. Perhaps in some circumstances second hand goods might be caught.

Under section 22 (7) neither gold, silver nor any alloy with more than 2% of its weight attributable to gold or silver, falls within the definition.

If a person is likely to be handling scrap metal, the next step is to consider what “carrying on business as a scrap metal dealer” means. Section 21 (2):

A person carries on business as a scrap metal dealer if the person-

      1. carries on a business which consists wholly or partly in buying or selling scrap metal, whether or not the metal is sold in the form in which it was bought, or

      2. carries on business as a motor salvage operator (so far as that does not fall within paragraph (a)” [Emphasis added]

The definition of person within a statute covers a company or other legal entity unless the contrary is provided. A scrap metal dealer can be a limited company, a partnership, an unincorporated association or a sole trader.

Who is a motor salvage operator?

It is important to note that motor vehicle salvage operators fall within the ambit of the new Act, which repeals Part 1 of the Vehicles (Crime) Act 2001 and the Motor Salvage Operators Regulations 2002. This superceded legislation provided a formal system of registration with the local authority.

Section 21 (4) provides:-

For the purposes of subsection (2)(b), a person carries on business as a motor salvage operator if the person carries on a business which consists –

  1. wholly or partly in recovering salvageable parts from motor vehicles for re-use or sale and subsequently selling or otherwise disposing of the rest of the vehicle for scrap,

  2. wholly or mainly in buying written-off vehicles and subsequently repairing and reselling them,

  3. wholly or mainly in buying or selling motor vehicles which are to be the subject (whether immediately or on a subsequent resale) of any of the activities mentioned in paragraphs (a) and (b), or

  4. wholly or mainly in activities falling within paragraphs (b) and (c).

When the Act was introduced there was some concern that motor salvage operators might argue they were trading in second hand cars to avoid the ban on buying scrap metal for cash. The Home Office guidance (see above) explains:-

Issuing a certificate of destruction would clearly indicate that a vehicle is scrap and a trader should not in those circumstances pay cash for it. Where a certificate is not issued, factors such as whether the car has a valid MOT and is drivable without repair, and also whether the dealer has facilities for repairing vehicles and a history of selling vehicles, will indicate if it is second hand or scrap.

Responders to the Home Office review of the effectiveness of the Act suggested that the legal definition of scrap metal be extended to include any business involved in buying secondhand vehicles.

What does partly mean?

There is no definition of what partly means. It is clear that it does not mean mainly as this word is also used in ihe definition for carrying out a business as a motor salvage operator under section 21.

The Home Office originally gave an informal indication that the income generated from the sale of scrap metal would need to be “a key component of the total income” in order to come within the meaning of “partly” and satisfy the test for carrying on a business as a scrap metal dealer under section 21 (2) (a) . A distinction was drawn between “partly” or a “key component”, and “incidental”. Where the buying and selling of scrap metal was only an “incidental” aspect of the business, it might not fall within the ambit of the Act.

In its published supplementary guidance of October 2013, the Home Office abandoned its use of the word “incidental”. At paragraph 2.3 it simply concedes that it will be a question of fact for the court to decide whether the buying or selling of scrap metal forms such a “minimal” part of a person’s business that it does not fall within the Act. It notes that: there are many factors a court may consider in reaching its judgement such as the proportion of the business related to scrap metal in terms of value or volume.

Despite this submission to the will of the courts, the Home Office proceeds to express its views on whether skip hire companies, tradespersons and civic amenity sites are carrying on business as scrap metal dealers. At paragraph 2.8 the advice in relation to skip hire companies is fairly tentative: … a company that only rents skips to households where recoverable scrap metal forms a minor part of the skip contents and the company’s business may not require a license. Again, it will be a question of fact for the courts to decide.

The advice on tradespersons is more categorical at paragraph 2.9: Tradespersons will not require a scrap metal dealers license if buying or selling scrap metal is an incidental function of their business (eg being a plumber or electrician.). The word “incidental” crops up again without any foundation in the wording of the Act.

The guidance at paragraph 2.11 of the supplementary guidance on civic amenity sites is clear cut: Civic amenity sites, run by councils or contracted out to others, will not require a license. Why not? The 1964 Act accepted that local authorities might carry out business as scrap metal dealers in which event they needed to be registered as such, although they were exempt from the formal application requirements. The 2013 Act makes no provision for local authorities and in the absence of such an exclusion they are arguably caught within the same regime as others who deal in scrap metal.

The Local Government Association agrees with the Home Office. It argues that councils have a statutory duty to collect household waste and any resulting sales are incidental to this obligation. Furthermore, in 2013 only about 7.3 % of material recycled by councils is metal so it is only a small proportion and the income from it is insignificant.

When determining whether a person carries on business as a scrap metal dealer and requires a license, local authorities have been advised to consider whether the buying or selling of scrap metal forms an integral part of the business. Is it sold as a by-product from a manufacturing process? Is the buying and selling of scrap metal advertised?

Arguably anyone who recovers any salvageable parts from a motor vehicle for re-use before disposing of the vehicle under section 21 (4) (a) may be fall within the definition of a vehicle salvage operator and require a scrap metal dealers license.

The phrase scrap metal dealer is likely to be a fluid and flexible concept within the meaning of the Act. By the Home Office’s own admission, it appears to mean more than was intended. The extent of its meaning is to be determined by the courts on a case by case basis.

Who is a mobile collector?

Under section 22 (4) “Mobile collector means a person who

  1. Carries on business as a scrap metal dealer otherwise than at a site, and

  2. Regularly engages, in the courses of that business, in collecting waste materials and old, broken, worn out or defenced articles by means of visits from door to door.”

Visits from door to door may refer to speculative visits, rather than pre-arranged appointments. Section 2.12 of the Home Office supplementary guidance updated in December 2013 provides:-

If a scrap metal dealer (who is a motor salvage operator) holds a site license and employs or sub-contracts a company to pick up cars on the company’s behalf in the course of the business from that site we do not consider that they will need individual mobile collectors licenses as this is not regularly engaging in collection of waste materials and old, broken, worn out or defaced articles by means of visits from door to door but pre-arranged appointments.