We present a theoretical model of spin transport in metallic lateral valves that takes into account spin scattering on magnetic impurities. We show that the model agrees with recent experimental findings of increasing non-local spin signals by in-plane magnetic field, which is parallel to the injected spins. The increase arises due to reduction of conduction electron spin flips on magnetic impurities present at the metal-ferromagnet interfaces as they freeze out under application of the magnetic field.