Purchases from the UK

I've purchased several items from the UK over the last few years and since I am not an EU resident, I have not paid the 17.5% VAT. I have always recieved this as a discount from the retail price since it always includes VAT.

I now have a merchant that is telling me the price listed in pounds on the website is the price I should pay without a VAT discount.

I thought that retail prices in the EU now alway include VAT. Is this correct or is the mechant trying to make a few extra bucks and keep the VAT? I am being charged shipping which is not inexpensive.

Thanks,
Another Andy