It seems like a classic case of officials not fully thinking things through, not seeming fully cognizant of how things actually function at the real-world brass-tacks level -- one has to wonder if they've ever purchased something online and paid close attention to the order of steps they took through that process -- and presuming that something easy for them to describe must be easy to technically implement, as this recent xkcd comic illustrates:
We've had a somewhat similar proposal here in the US, the so-called "Marketplace Fairness Act" which fortunately got stalled in Congress (though some are still pressing to get it passed by year end), whereby merchants nationwide would be expected to collect and remit sales taxes according to the rate at their buyers' respective locations. This raises a question of who exactly is being taxed, the merchant or the consumer? IMHO, since it's the merchant who must ultimately remit the tax to government, they are the party being taxed, so they should only be subject to taxes levied by their own representatives; they should not be subject to taxes determined by and payable to other jurisdictions where they have no representation or recourse. The latter amounts to "taxation without representation", and I seem to recall we held a revolution over that matter some time ago...
Unfortunately, even if the UK grants an eleventh-hour reprieve to those under the UK-only VAT threshold -- which it's not clear they can just do unilaterally if this is pursuant to a treaty with the EU -- that still leaves Continental EU merchants (and possibly all merchants worldwide who sell to consumers in the EU) subject to this absurdly complex scheme, made all the more Kafkaesque by the fact that, unlike the UK's MOSS, they don't even have domestic clearinghouses for EU-wide VAT collections/remissions, so they'd be required to register for VAT with each and every single EU country they sell to. Complying with domestic red tape is challenging enough for any merchant, so 28 countries' worth of red tape is simply untenable.