Are you not then liable for UK VAT, as you would be if you ordered from overseas and shipped to UK?
Nope
You pay the host nation's VAT and then they reimburse you.
It's a scheme to encourage tourism I think. Happens all over the world. Def in the USA as well as EU
There is a duty free allowance of £390 (per person, per trip). Go over that and you do have to pay VAT and duty. That's what the red channel is for.
@mashton started
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Are you not then liable for UK VAT, as you would be if you ordered from overseas and shipped to UK?