That's not actually the case. Consumers aren't obliged to pay VAT at all, they just pay the retail price/subscription fee of whatever they are buying.
The supplier of the goods/services is obliged to account for VAT at the appropriate rate and hand it over to the relevant government, regardless of what VAT (if any) they charged on to the consumer.
In Setanta's case, an element of the subscription fee comprises Luxembourg VAT, and no UK VAT at all. The Lux. VAT rate is actually just 3% after checking it out.
So if the subscription is ?12.99 a month, Setanta get ?12.61 and 38p goes to the Luxembourg tax man. If however the transaction was subject to UK VAT instead, Setanta would get just ?11.30 and ?1.69 would go to Gordon Brown.
Not quite - according to HMRC "If you're VAT-registered you must charge VAT on all goods and services you sell unless they are exempt from VAT" - effectively if you're a UK company you are required to collect the tax from your customers. Similar conditions apply in all member states. Apart from the semantics of that, your sums are correct.
My understanding of the problem, however, is that it has nothing to do with moving to Luxembourg, and is simply an unpaid bill for VAT dating back to when they were legally based in Ireland/UK.