Trading as a scrap metal dealer

Payment methods for buying and selling scrap metal

Can I buy used vehicles with cash?

Not if the vehicle is considered scrap. You can pay cash if there is a genuine potential for repair and resale of the vehicle.

A vehicle is considered scrap if it has been issued with a certificate of destruction or if it does not have a valid MOT and the car is not drivable without repairs being carried out.

If you do pay cash for an un-driveable vehicle that has no valid MOT certificate you may have to justify your assessment of the ability of the vehicle to be repaired in court.

Please note, cash cannot simply be paid for everything on the basis that you will repair and resell it if you have no facilities of repairing vehicles and no history of repairing vehicles. Similar issues may arise for the purchase of other items and appliances.

Can I still buy scrap metal for cash?

No. Any holder of a licence, whether a site licence covering a scrap metal dealer or motor salvage operator, or mobile collector, can only pay for scrap by way of a cheque which, under section 81A of the Bills of Exchange Act 1881, is not transferable or by electronic transfer of funds. This includes paying in kind, whether by goods or services. If cash is paid for scrap each of the following is guilty of an offence:

• The scrap metal dealer
• If the payment is made at a site, the site manager
• Any person who makes the payment acting for the dealer

However, it is a defence for the dealer and site manager to prove that they have made arrangements to ensure cash was not paid for scrap and that they had taken all reasonable steps to ensure the arrangements were complied with.

It is acknowledged that the electronic payments market is rapidly evolving with new products regularly entering the market.

Why can I not buy scrap metal with cash?

Payment methods which provide anonymous or near cash alternatives are not acceptable within the legislation.

Are all other payment methods acceptable?

No, you cannot pay for scrap metal using any payment method which is anonymous in nature and require only simplified due diligence under the Money Laundering Regulations

Unacceptable payment methods include: 

• Postal orders
• Foreign currency
• Electronic vouchers
• Virtual currencies
• Mobile phone airtime credits
• Retailer/supermarket gift cards and vouchers
• Single, non-reloadable pre-paid debit cards
• Re-loadable debit cards

Record keeping

What records does a dealer have to keep on receipt of scrap metal?

If a scrap metal dealer receives any scrap metal they must record:

• The description of the metal, including its type, form, condition, weight, marks identifying previous owners or other distinguishing features
• Date and time of the receipt
• If delivered on a vehicle, the registration mark of the vehicle
• Name and address of the individual if received from an individual
• Name of the person paying the supplier for the metal
• Copy of any document used to verify the name and address
• Copy of the cheque, if the supplier is paid by cheque
• Receipt identifying the electronic transfer if payment was by that method or, in the absence of a receipt, identifying particulars.

The above information must be retained in a way that can link it to the scrap metal it refers to and must be retained for three years. 

Records must be recorded in a manner which allows the information and scrap metal to be easily identified by reference to each other. The requirement to link recorded descriptions to the scrap metal to which they relate is intended to be proportionate and it may not be possible to go into the same level of detail for larger deliveries. If the scrap is, for example, one washing machine, it would be sensible to say so rather than use a more generic term. The records should contain sufficient identification detail to ensure there is no intention to obscure the identity and type of metal being processed.

If the dealer receives the metal from a person, the dealer must keep a copy of any document which the dealer uses to verify the name or address of that person (see 12. below for acceptable forms of ID).

How do I verify the identity of suppliers selling scrap metal?

You must verify a person’s name and address, to verify the identity of suppliers selling scrap metal the scrap metal dealer must refer to either:

• A document which bears the person’s full name, photograph and residential address
• A document which bears the person’s full name, photograph and date of birth, and a supporting document which bears the person’s full name and residential address.

The documents that can be used to verify the identity are:

• A valid United Kingdom passport
• A valid passport issued by an EEA state
• A valid Great Britain or Northern Ireland photo-card driving licence a valid UK biometric immigration document, and
• A bank or building society statement; a credit or debit card statement;
• A council tax demand letter or statement; or
• A utility bill, but not a mobile telephone bill provided that the date on which the document in question was issued is not more than three months before the date when the scrap metal is received by the scrap metal dealer

What records do I need to keep on disposal of metal?

The dealer must record the following information:

• Whether or not it is in the same form which it was received
• Whether or not the disposal is to another person
• Whether or not the metal is dispatched from site

Where the disposal is in the course of business under a site licence, the dealer must record the following information:

• The description of the metal, including its type (or types if mixed), form and weight
• The date and time of disposal
• If the disposal is to another person, the full name and address of that person
• If the dealer receives the payment for the metal (whether by way of sale or exchange), the price or other consideration received

Where the disposal is in the course of business under a collector’s licence, the dealer must record the following information:

• The date and time of the disposal
• If the disposal is to another person, the full name and address of that person

The information must be recorded in a manner which allows the information and the scrap metal to which it relates to be readily identified by reference to each other. The dealer must keep the information and other records for a period of three years beginning with the day on which the metal is received.

Do I have to verify the identity of repeat suppliers every time I buy scrap metal?

No, whilst a scrap metal dealer must keep a copy of any document used to verify the name and address of the supplier, you can verify the name and address of repeat suppliers by referring to a copy of the document(s) retained in your records which were used to verify their name and address before, for example, documents supplied to you on the first transaction.

How do I verify the name and address of the supplier if the scrap metal has no obvious owner?

If you are a mobile collector and you pick up waste materials and old, broken, worn out or defaced articles have been left abandoned on the roadside there may be no obvious owner and therefore, it may not be possible for you to verify the name and address of the supplier.

However, as a mobile collector, you must record the description of the metal, including its type (or types if mixed), form, condition, weight and any marks identifying previous owners or other distinguishing features and the date and time of its receipt. If a mobile collector collects scrap metal from a person, they will need to verify the name and address of that person. However, repeat recording of property as being 'found' and having no owner’s records to connect may indicate evasion of the mobile collector’s record keeping duties which may warrant further investigation.

Last updated: ‎05‎/‎06‎/‎2024‎ ‎15‎:‎00‎