Reclaiming VAT on Etsy seller fees when selling to USA only

Hi, I started selling print on demand on Etsy in August. I am based in the UK, but I am only selling to customers in the USA. Items are printed in the USA and sent to customers based there, products never leave the USA. Due to being located in the UK, I am being charged VAT on Etsy seller fees and am wondering if I can claim them back, seeing as though I do not charge VAT to my US customers (US sales tax is charged but those taxes are dealt with by Etsy). Currently, my revenue is well below the threshold for VAT registration, and my company is also not yet registered. As I have already been charged hundreds of pounds worth of VAT costs by Etsy, I would like to claim these back if possible. Many thanks.

Hi,
You will not be able to claim VAT back unless you are VAT registered.
In order to be VAT registered you will need to be making taxable supplies.
We would recommmend consulting the following guidance to see whether this will be possible for you:
Who should register for VAT (VAT Notice 700/1
Thank you.

Hi, many thanks for your response however the guidance is confusing as there are a few moving parts, complicated by place of supply and whether or not this scenario comes under some sort of 3rd party arrangement: 1. I sell printed T-shirts on an online marketplace (Etsy), who charge me VAT on all of my seller fees 2. When an order comes through on the online marketplace from a US-based customer, this triggers an order of the T-shirt from the printer, based in the USA. 3. The printer charges me for the T-shirt, but they do not charge me VAT, as they are based in the USA. They then print the shirt, and send to the US-based customer who paid for the order via the online marketplace, and paid the necessary US sales tax No exports take place, and I hold no inventory. I get the impression therefore that my purchases of t-shirts from the printer, and the sales that I make to the US-based customer are either out of scope or exempt from VAT. And if that is the case, would it be possible or not to claim back the VAT purely on the expenses that I incur in my business if I were VAT registered? Many thanks for your help.

Hi LB T,
From the information provided it appears that you do not make any taxable supplies in the UK only abroad.
However, if you have a business establishment on the UK or you live in the UK, you may be able to register for VAT on a voluntary basis subject
to the requirements in section 2.9 of notice 700/1
Who should register for VAT (VAT Notice 700/1) 2.9 If you only supply goods or services abroad 
You would need to be VAT registered in the UK in order to reclaim any UK VAT that you are incurring in relation to your supplies.
Thank you.

Thanks so much, that all makes sense and is extremely helpful. One final question, if I may? Once I am VAT registered and am required to fill in a VAT return, am I right in thinking that in this scenario, the only box I would need to fill in is Box 4, with the VAT I hope to reclaim on the expenses that Etsy charge me? If I do not make any taxable supplies in the UK, I am guessing that I do not fill in Box 6 with my sales to the US, and I do not fill in Box 7 with my purchases from the US - please do feel free to put me right if I have misunderstood this! Thanks again for your help.

Hi LB T
Hello. Please refer to notice 700/12 section 3 for a box by box guide for filling in a VAT return. 3. How to fill in each box on your return You would be using Making Tax Digital Software if you become VAT registered so the software would be completing the return for you. Guidance on Making Tax Digital can be read in notice 700/22: VAT Notice 700/22: Making Tax Digital for VAT.
Thank you,

Thank you once again - so it looks as though sales I make to US customers will need to be included in box 6, even though they are outside scope of UK VAT (as per the Place of Supply of Services VAT Notice 741A), but purchases made from the USA are excluded from box 7 due to being expenditure outside the scope of VAT, because it is not consideration for a supply (which makes sense, as I am not charged VAT on purchases by the US supplier). This means only the expenses charged by Etsy will be included in box 7, with the VAT I hope to reclaim on those expenses input into box 4. I'm aware of Making Tax Digital, but will acquaint myself with the guidance you have very kindly provided. I appreciate all of your help - many thanks.