Scrap metal licences – do you need one?

The Association of Chief Police Officers (ACPO) estimates that metal theft costs the UK economy around £750m every year, and in 2012 claimed 10 lives.

In an attempt to regulate the industry, the Government announced that from the 1st October 2013 every scrap metal dealer in England and Wales is required to apply to their Local Authority for a licence to operate. Enforcement began in December 2013 to allow the £5b industry time to adjust, but those affected must apply for an interim licence from.

However, scrap metal dealers are not the only businesses to be affected. In some circumstances companies operating HGVs which carry scrap metal or salvaged vehicles will also be required to apply for licences.

The industry’s representative body (the British Metals Recycling Industry, or BMRI) welcomed the move, saying “the implementation of the new Scrap Metal Act is a watershed moment for the industry; it’s an opportunity to rid the industry of the ‘Steptoe & Son’ stereotype”. But what effect will the legislation have on the haulage industry?

The New Law – The Scrap Metal Dealers Act 2013

The new Act states that scrap metal dealers, and motor salvage companies, cannot operate without a licence. To do so could result in a criminal conviction and a fine of up to £5,000. Beyond these repercussions, the business would be affected by adverse publicity that the public conviction may draw, potentially damaging business relationships and negatively impacting brand value.

Applications must be made to your Local Authority, and a licence fee (set by the Local Authority) paid. Licences will remain in force for 3 years from the date of grant. The licence is non-transferable (meaning it cannot be transferred from one person to another), to do so could result in a criminal conviction and fine of up to £1,000. Applicants could also face the same charges if they make a false representation in the application. The financial impact of the fine may be minimal, but the Act allows Local Authorities to consider previous breaches of the Act when considering new applications, so leaving open the possibility of being unable to trade due to want of a licence. The adverse impact of a criminal conviction should also be considered.

It should be noted that the Act allows applicants to appeal decisions made by the Local Authority, so a refusal to grant a licence may not be fatal to your business. Applicants have the right to make representation to the Local Authority within the notice period set by the Authority. Considering the importance of the application you may wish to seek legal advice before making representations.

The licence can be revoked for a number of reasons including where:

• The licensee does not carry out business where they indicated on application.

• The site manager named in the licence does not actually act as site manager at any relevant site.

• The Local Authority no longer views that licensee as a suitable person.

• The site manager is convicted of a relevant offence (theft, for example).

Again, the revocation can be appealed and proper legal advice should be sought.

Does the new law affect my business?

The Act applies to businesses that wholly or partly buy and sell scrap metal. Scrap metal is defined as metallic waste, or an article that contains metal and has come to the end of its useful life. Gold, silver, and alloys that are 2% or more gold or silver are not included.

Businesses engaged in recovering salvageable parts from motor vehicles and scrapping the remainder, and those buying written-off vehicles, will be caught by the Act.

A good rule of thumb may be to ask ‘is the sale of the scrap a by-product of the business’s primary activities?’ If the answer is yes, there should be no need to apply for a trading licence. If you have any doubt, specific legal advice may be required.

In short, the majority of the Haulage Industry should be unaffected, but it is important for your business to consider the issues discussed.

This article was written by DWF’s Motor Prosecutions Unit; a specialist team dedicated to defending proceedings brought against drivers. To contact the Motor Prosecutions Unit, please email Lee Foulser (lee.foulser@dwf.co.uk) or Nina Lewis (nina.lewis@dwf.co.uk).

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