I think all the above is great to explain the situation but regardless the garage can charge what they want, the legalities of VAT being added/stated/included is largely irrelevant as that's their problem if they get caught being naughty or not playing by the rules.

The charge to you is what they see fit to charge you - if you think you're being stung tell them and see what they say. If you don't then pay and job done.

Ultimately a bill stating
£240 including VAT
£240
£200 + VAT
are all the same to the customer, the issue is how the garage deals with the VAT and the end user deals with the VAT if they are a business that is the issue. As an ordinary punter its £240 to pay, with thanks.

J