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Bullion dealers set to avoid trade blight of new scrap metal rules

12 March 2012Written by Ivan Macquisten

IT appears that precious metals will not be included in the new Scrap Metal Dealers (Amendment) Act if it reaches the statute book, as expected, later this year.

The position has remained unclear since sponsoring MP Graham Jones told ATG back in November that parliament might well consider including those dealing in bullion and other precious metals, although there were no specific plans to do so.

Now, however, it seems that if such discussions have taken place the decision has been taken not to widen the remit of the Bill, which has been drawn up to tackle crime by removing cash transactions from the scrap process.

The draft Bill going through Parliament seeks to amend the 1964 Scrap Metal Dealers Act, and it is that Act that specifically excludes a number of precious metals from the legislation.

Clause 9.3 of the 1964 Act defines which metals can qualify as scrap and lists aluminium, copper, iron, lead, magnesium, nickel, tin and zinc or… brass, bronze, gunmetal, steel, white metal "or any other alloy of any of the said metals".

However, Clause 9.4 of the Act adds that "For the purposes of this Act, a substance being an alloy referred to in the last preceding subsection shall not be treated as being such an alloy if, of its weight, two per cent or more is attributable to gold or silver or any one or more of the following metals, that is to say, platinum, iridium, osmium, palladium, rhodium and ruthenium".

In other words, truly precious metals are exempt.

As the draft of the new Bill does not deal with this area of the original Act, these original clauses remain in law.

Brighton-based Michael Bloomstein, who supplies ATG's weekly precious metal prices, had feared that any measures taken to include registered bullion dealers like him under the Act would have backfired in the fight against crime.

"Remember that although we pay cash for items, when we sell we create a paper trail, effectively bringing back precious metals into the system. Additionally, when we buy precious metals, we pay VAT on behalf of the customer to Customs and Excise - our VAT bill was a substantial amount for silver alone in the last quarter. If you ban us from paying cash for precious metals such as gold and silver, people will go elsewhere, and that paper trail won't be created, and the VAT will be lost."

While the main trade in precious metals should not be affected, the trade in recovering precious metals from electronic scrap may well be as it is generally less than 2% pure. This includes items such as gold-plated contacts and switches from old computers, all gold-plated and silver-plated items and also some jewellers' floor sweeps.

"Although the recovery of precious metals from these items is usually a fraction of 1%, lower grade recovery is in itself a multi-million pound business," Mr Bloomstein explained.

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