There is a family near me who regularly breed dogs. They are backyard farmers and have both dams and sires. They have been reported to the RSPCA by people over the years to no avail depite their own vet refusing to deal with them anymore.

I personally have stayed well out of it but I've just seen in my local Yellow Ad Trader that they are selling 3 litters, one of each of the following breeds: Beardies, Border Collies and GSD's , surely they need a license for this?

Yes, so reporting them to the Local Authority is the way to go.

Anyone breeding five or more litters in any 12 month period is required to have  breeding license.  the tax Man would be interested too.

If you can get hold of previous adverts etc with which to show the number of litters requires a License then the LA will have more to go on when they investigate.

Problem is depending on the LA they may just simply give them a License.

Here is the relevant Act http://www.opsi.gov.uk/acts/acts1999/ukpga_19990011_en_1