There are several pieces of legislation that apply to scrap metal dealers. They cover areas such as licensing, recycling, and cheque cashing.
What licences does a scrap metal dealer need?
The scrap metal sector is subject to strict licensing controls. As a scrap metal dealer, you must:
- register as a scrap metal dealer (under a site-based or mobile collector's licence in England and Wales) - or as a vehicle dismantler if appropriate - with the local authority. All dealers and itinerant collectors in Scotland must be licensed and this requirement also applies to motor salvage operators
- register as an upper tier waste carrier/broker/dealer with the Environment Agency or the equivalent regional environmental regulator
- apply for planning permission from your local planning authority if you are going to operate as a yard-based dealer
To operate a scrap yard, you must also obtain either a metals recycling site waste management licence/environmental permit or exemption status from:
- the Environment Agency in England
- Natural Resources Wales
- the Northern Ireland Environment Agency
- the Scottish Environment Protection Agency (SEPA) in Scotland
Exempt waste operations are low risk activities. The exemption available for scrap metal recovery is referred to as a T9 exemption. To obtain a licence or exemption status you will be subject to certain checks. For example, you must be 'fit and proper' to run a scrap yard and must in most parts of the UK satisfy the relevant agency of this by obtaining appropriate operator competence certification under an approved scheme. Visit the Waste Management Industry Training and Advisory Board - WAMITAB - website for more information. As well as this, both licensed and exempt yards have to meet certain requirements, such as security fencing, storage, road surfacing, drainage, signs and so on. You will have to pay an initial registration fee and an annual renewal fee if you need a waste management licence or environmental permit, but there is no fee to register an exemption if this applies.
Whether you are licensed or exempt you will be subject to duty of care. This means you will have to keep records (for at least two years) of when you receive and transfer waste and take reasonable precautions to ensure it is secured.
Under the End of Life Vehicles Directive, scrap yards wishing to 'de-pollute' vehicles have to apply for a site licence or permit to operate as an authorised treatment facility (ATF). Additional site facilities will be required before the site can be licensed to de-pollute vehicles. End-life vehicle de-polluters in Wales will also need to register as hazardous waste producers if they produce and/or store 500kg or more of hazardous waste such as used motor oil or lead-acid batteries in any 12 month period. This registration requirement can also apply to other scrap metal dealers if they handle items like refrigerators which can contain ozone-depleting substances. (Note that businesses in England no longer need to register with the Environment Agency if they produce, handle or store 500kg or more of hazardous waste.)
There's more about environmental permitting on the Gov.uk website. For further guidance on licensing requirements, contact the Environment Agency or Scottish Environment Protection Agency. The Environment Agency has local offices around the country, or you can call their general enquiry line on 03708 506 506. The Scottish Environment Protection Agency (SEPA) has regional offices and a head office in Stirling. Tel 03000 99 66 99.
Bear in mind that you will need an operator's licence if you use any vehicles over 3.5 tonnes gross vehicle weight and your driver/s must be appropriately licensed to drive this class of vehicle. Drivers must also have passed the initial Driver Certificate of Professional Competence (CPC) qualification.
Be aware that if you offer cheque cashing facilities on site as a means of enabling sellers to obtain cash for their scrap then there may be a registration requirement as a 'money service business' under anti-money laundering regulations. You can read more about the supervision of money service businesses for anti-money laundering purposes - including businesses which offer cheque cashing services - on the Gov.uk website.
What legislation applies to scrap metal dealers?
Depending on the range of activities you engage in, there is a significant amount of legislation that may apply to your business, particularly in the areas of waste management, environment protection and health and safety. Some of the key areas where legislation is likely to affect your scrap metal business are listed below. The list is not intended to be exhaustive.
There are certain pieces of legislation that you have to be aware of. These include:
- The Scrap Metal Dealers Act, which was comprehensively overhauled in 2013
- The Air Weapons and Licensing (Scotland) Act
- The Environmental Protection Act
- The Environment Act
- The Hazardous Waste Regulations
- The Environmental Permitting Regulations - affecting businesses in England and Wales
- The Waste Management Licensing Regulations - affecting businesses in Northern Ireland and Scotland
- The Waste (England and Wales) Regulations - implement the EU Waste Framework Directive. Similar legislation applies in Scotland and Northern Ireland
Some of the most important issues that you should be aware of include:
- you must be registered with/licensed by your local authority
- you must keep a record of all scrap that you buy, process and sell. This is commonly referred to as the Police Record
- you must not pay with or accept cash when you buy or sell scrap metal in England, Scotland and Wales
- you must register as a carrier of waste and have a waste management licence/environmental permit - or exemption status - from the Environment Agency in England, Natural Resources Wales, the Northern Ireland Environment Agency, or the Scottish Environment Protection Agency (SEPA) in Scotland. The requirements for both the licence and exemption status are stringent and include background and financial checks. You will in most cases be required to demonstrate your technical competence. If you're applying for an environmental permit you'll need to submit a fire prevention plan with your application
- further requirements apply to 'hazardous wastes' - these are items such as lead acid batteries, oil and PCB contaminated scrap. A consignment note must be completed for each transfer of this type of waste. Transfers of waste across the England/Scotland border may be covered by a consignment note from either the Environment Agency or the Scottish Environment Protection Agency
- you must declare on waste transfer notes (or equivalent documentation), or consignment notes for hazardous waste, that you have applied the waste management hierarchy as set out in the EU Waste Framework Directive (the waste transfer note procedure can be completed online)
For further guidance on licensing requirements, contact the Environment Agency, Natural Resources Wales, the Northern Ireland Environment Agency or SEPA.
You can find out more about the legislation that affects scrap metal dealers - including news about new, updated and forthcoming regulations - on the Letsrecycle website. Guidance is also available to download from the Gov.uk website.
The British Metals Recycling Association (BMRA) can provide advice and guidance to members on regulation, legislation and environmental matters.
The End of Life Vehicles (ELV) Directive introduced controls on the scrapping of ELVs and only allows them to be scrapped by authorised treatment facilities (ATFs). Scrap yards need to be licensed if they want to handle ELVs before they have been 'depolluted'.
The Ozone Depleting Substances Regulations have classified old refrigerators as hazardous waste and the CFCs from foam in the fridges have to be recycled in specialist facilities.
Businesses that recycle and recover waste electrical and electronic equipment (WEEE) need an appropriate environmental permit, waste management licence or exemption to cover this activity.
Similarly, scrap metal dealers that treat or recycle waste batteries - including car batteries - must apply for approval as an approved battery treatment operator (ABTO) from the Environment Agency or the equivalent authorities in Scotland and Northern Ireland. ABTO approval is required in addition to an appropriate environmental permit. If you are a final holder of waste automotive batteries you can request free collection of them from any producer that supplies new batteries.
Control of substances hazardous to health (COSHH)
If you handle, store or sell any potentially hazardous substances you must evaluate all risks to employees and implement procedures to remove or reduce these risks by preventing or controlling exposure to the hazardous substances.
If you introduce an on-site cheque cashing service for people you buy scrap from, you must normally register with HM Revenue & Customs (HMRC) as a money service business (MSB) under the Money Laundering Regulations. You will need to comply with the terms of the regulations. You must also make sure that your bank has authorised you to offer the service. You can find out more about the supervision of money service businesses for anti-money laundering purposes - including businesses which offer cheque cashing services - on the Gov.uk website.
Health & Safety, fire
Anyone employing staff must comply with employment legislation. Important areas of legislation include recruitment, employment contracts, pay, working hours, holidays, employment policies, sickness, maternity, paternity, discrimination, discipline, grievances, dismissals, redundancies and employment tribunals.
Insurance for a scrap metal dealer
Contact an insurer or insurance broker and explain exactly how your business will operate - they will then explain what insurance cover you must have by law, and other cover you should consider. This might include:
- premises, premises contents and stock
- goods in transit (being collected or delivered)
- business interruption
- employer's liability
- public liability
- product liability
- motor insurance (for vehicles)
The British Metals Recycling Association (BMRA) can advise members on insurance matters and put them in touch with insurers who can provide bespoke cover.
When comparing insurance quotes, uncover the differences between policies by using an insurance comparison form.