If something is advertised as "tax free" and it is not sold as such, and charging the VAT, any of it, means it's not tax free, it would be the criminal offence of fraud, see the Fraud Act 2006. It would be a false representation with a view to gain or cause loss to another under section 2. This has to be done dishonestly of course. And if they didn't know it then, now they most certainly do know it is dishonest.
As for Duty this is different and is a Customs matter and my understanding is it is levied on the usual suspects ie booze, fags and perfume. I understand there is a HMRC requirement for the seller to ensure the passenger is leaving the EU, hence the boarding card must be produced.
Like a lot of posters here I have noticed the absurd high pricing in UK airports so these days I only buy water and a paper and occasionally a whisky I particularly want which is not available on the High Street.