Yes, exactly this...VAT is a consumption tax and when we were in the EU, our VA and customs border was the external boundary of the EU, which we were inside. The UK govt applies it to pretty much all products and services bought, with a few exceptions (see my earlier post). When we were in the EU, we were part of a the Single Market, so as far as the EU and hence UK was concerned, it didn't matter if you bought something from Madrid, or Munich, as long as it was sold in the EU, no additional VAT or customs was added as it had already been applied and paid for somewhere. That wasn't the case if you bought from outside the EU, say the US or Japan, when VAT and customs was applied, and added / charged by your on-line seller (eg eBay GSP), or collected by your courier.
Now we are outside the EU, this no longer applies. So you if you live in London and buy from someone in Manchester, then there are no additional charges, but that's no longer the case for Madrid or Munich- the UK govt, is , as far as it is concerned, not collected it's due, which it is now doing. It was one of the benefits fo being its he Single Market, and one of the reasons other countries have sought to join the EU. The UK get can chose when and what to apply VAT to, and could remove it or change the rate, but I doubt it will as its tax that raises a lot of revenue, and I'm not sure the UK could just waive it for EU goods.
All of this was known before, during and after the Referendum, and during negotiations, and was one of the reasons why some argued for staying in the Single Market and Customs Union or having a Norway style deal. Our Govt chose a harder Brexit, and this is the consequence, Why this wasn't communicated, understood more widely, and the country given more time to plan for it, is another debate..
