I think those answers mean that my understanding was wrong, and if you buy a PG Music product that is downloaded, you still pay a large tax. Is that correct?
That's correct. The tax is applied on the
value of the goods or service supplied. Even if PGM didn't apply it, in principle HM Revenue & Customs can and should. If they do, they may well of course also fine, or could take legal action.
It is, IMHO, a rather nasty iniquitous tax, because it gets applied at every transfer of transfer of value ... VAT registered businesses can claim it back when they buy and pretty much have to to remain competitive, so every transaction requires the business to be a tax refund claimant on a purchase and a tax collector on a sale.
On a plus side for us in the UK, though, many people don't have to file a personal tax return for their earnings.