I had seen a tweet about that article but, reading it just now it sounds like utter garbage. Of course Amazon are excluding the VAT from their cost prices, why would anyone not do that? Why on earth would they allow the publishers to charge them more because they are paying a lower rate of VAT? It's only agency pricing that stops them passing on any of that cost saving to the consumer.
They aren't "pocketing the VAT" - I imagine that would be massively illegal - they are simply making more profit by avoiding the UK rate, which was surely the point of the whole Luxembourg scheme. I might find that objectionable, but I don't see any new information here.
It seems like a bit of corporate mud-slinging, to me.