Scrap metal dealing and VAT

One very confused person needs help!

I have a client who is about to start dealing in scrap metals. He will buy scrap items from both private individuals and businesses and sell onto another main scrap dealer for profit. I have called HMRC to clarify my understanding and I am actually now more confused.

I had hoped to use the global accounting scheme for VAT where VAT is paid simply on the difference between the purchase and selling price - as no individual item of scrap is worth over £500 this should not be a problem.

However HMRC have indicated that this would be OK when dealing with non-vatable individuals / businesses this would not be the case if scrap was purchased from another vatable business and the a VAT invoice would be issued by the seller and that this scrap would need to be tracked seperatelty when sold to the main dealer - thus possiblty becoming an admin nightmare.

Has anyone experience of this sector and the VAT treatment?

ALso I understand there are moves to change the suppy of VAT onto a reverse change basis - possibly on May 1st 2011.

thanks