I've just ordered too and it took me a while to understand what was happening but its like princess layla has said, they work it out as a discount on the product so that although you still pay vat you have saved 20% overall, so its like getting the items vat free. Slightly confusing!!!
When I read the offer was vat free I did think it was weird as I know if is illegal to advertise or offer a vat free deal. You can say we pay the vat or have a 20% off discount. It does seem a bit sneaky though and I would be annoyed if I'd ordered and found that I was paying the full price at checkout.