Only ever been charged VAT/Import on the declared value.
Which is always (in my cases) the value of the item.
/shrug. They don't enforce their own regulations then
http://www.hmrc.gov.uk/customs/tax-and-duty.htm
Scroll down to "Import VAT rate" for source.
edit: you're supposed to declare the value of the item as the total including delivery, I would guess.