An imitation firearm is defined under the Act as an article of any material or colour that is a copy or reproduction of a firearm or has the appearance of a firearm and could reasonably be mistaken for a firearm.
It is the size and features of the item which make it an imitation, not the colour. If it is clearly a toy it is not an imitation firearm. If it could reasonably be taken to be a firearm then it is an imitation firearm.
You must be the holder of a firearms licence to possess an imitation firearm (other than a toy). The only ‘genuine reason’ to possess imitation (or replica) firearms is collection. You must have the licence of the appropriate category for the type of imitation firearm you wish to possess.
Imitation firearms are not required to be registered although all other provisions of the Act (including safekeeping and storage) apply to imitation firearms as if they were ‘real’ firearms.
It should be noted that imitation machine guns or sub-machine guns are not category D (imitation) firearms. They are classified as Schedule 1 – Prohibited firearms and so an exemption would be required for these items to be possessed.