However there is no way I want to get done for possession of a prohibited material then try to apply for a licence to store or manufacture.
There's no such thing as a 'prohibited material' except say kiddy porn. There are specific laws against having say plutonium (international treaties), b**bs, explosives, but there is nothing illegal about owning a load of chemicals. Nor is there anything illegal about owning fireworks or compositions if they were made and are stored in accordance with the law. There are 'prescribed materials', like drugs, carcinogenic chemicals, some chemical that pose special interest to the manufacture of IEDs, which own can only legally posses if one has an end user certificate, an example would be a prescription!
There are guidelines that the police are suppose to follow upon making a 'find' of chemicals (but they rarely do btw). If certain chemicals are found in certain quantities it warrants further investigation by scientific services (a branch of the police), that's all. It is not within the police power to arrest if you own chemicals, nor is it within their power to confiscate chemicals for no good reason.
I had a thought. If one has a registered explosives store (easy and cheap). You could make all your compositions at a registered factory (local of course), perhaps at a club (in the future). As most compositions are 1.4 you can legally transport up to 333kg on UK road without any certificate or training, if you stuck below 20kg which I'm sure you'd bloody well want to you can even carry comps classed as 1.1G. Once at your registered storage (shed ), one could assemble up to 10kg of fireworks at a time. Basically a good arrangement and safe legally for amateur work would be to manufacture your explosives at a licensed factory, store them at your home (registered of course) and then use the exemption in Regulation 9 to assemble fireworks at up to 10kg at a time.