having only seven hives would not satisfy HMRC that it is a 'serious' business so they would refuse registration
Completely untrue. They will not and cannot refuse a voluntary VAT registration for even the smallest enterprise, as long as it passes the test of not being just a hobby venture.
Anyone who makes regular commerical sales can be regarded as a business. Per VAT notices 700 and 700/1 there is specific mention of VAT registration not being permissible to ouputs/inputs related to 'hobby' activity, but the definition of that is subjective. Certainly, if there is not regular turnover (whatever the value) then you won't qualify for VAT registration. It is also useful to reflect on the fact that for Self Assessment purposes, the trading alowance for hobby income (based on turnover (not profit)) up to which you don't pay any income tax is £1,000. In fact, below those levels, you don't even need to declare it.
It is therefore reasonable to assume that, based on >£1,000 of annual turnover, and this being a regular activity (e.g. the wholesale or retail of honey) this is a business activity you can/should consider registering for VAT. You won't get refused. Obviously, the whole point of a business is that it should be run to ultimately render a profit. Again, that (i.e. how long you can justify making trading losses on a small scale enterprise before it is becomes clearly unprofitable) is subjective.
Really, the whole point should be you ultimately making a taxable profit (no matter how small).
If you embark on your venture, and say, fail to get the traction, there is nothing stopping you from de-registering from VAT at a later date.
As it stands, whilst some of your £3.2k of inputs (e.g. feed) may be zero-rated, most of your inputs will most likely be standard rated, and the related VAT could therefore be reclaimed. Not being VAT registered means that you are missing out on up to £550 VAT-back on your purchases.
Assuming the majority of your sales are honey (which is zero-rated), there won't be much, if any, VAT owing to HRMC in the other direction.
... So to me, it's a no-brainer. If you're fundamentally honest, and you keep your receipts, you have notthing to fear, if HRMC come calling.
Also, in relation to Income Tax, and assuming (as above) you turn-over >£1,000, then, of course, you MUST declare your income. Here, you can either choose to offset your income against the trading allowance, or - given that your expenditure at this phase of your enterprise is in excess of your income - offset your income with expenses ... leaving you with a trading loss - which is tax allowable, at your prevailing income tax rate.
This is not bogus or specious. It is not fraudulent, nor in any way 'tax evasion' - it's just applying the rules which apply to us all.
Your choice whether you do it, but if you were a 40% taxpayer, and you were making a c.a. £1k trading loss for the forseeable (say £3k inputs, £2k outputs), then, between the Self Assessment and VAT, you could be setting fire to about £1k p.a. by not registering/declaring.
Not to be sniffed at.
