Just realised you said "do they show as an address option for customers" - ours is slightly different; customers can enter a county of their choice but the site will error trap and show the dropdown box with the "please choose from the dropdown" if they type it wrong. This also works in the Address Book once they're logged in.
Doing a bit **more **sleuthing, it appears that I'm half wrong, half right. I have VAT applied to the various modules and it seemed to be working fine to start with (we're VAT registered so that's all ok).. I'm using the zone rates for our courier offering and the Royal Mail shipping modules with updated pricing (manually entered by me!) - again, with.
With the Admin -> My Store tax settings set to Shipping, VAT calculation and charging behaves like you expect it to. How come it behaves like that though? Surely it should only calculate correctly given that VAT is calculated and charged based on the rate in the host country of the shop? (I'm marking this down to Zen Cart's US-centric behaviour if nothing else, unless you have a better understanding of why it behaves as it does :)
The VAT displayed is actually already included in the subtotal amounts for items and shipping, which has also been confusing me. It seems stupid but it's just not been "clicking", even though the prices for the goods and the courier-based zone shipping are clearly calculated including VAT on the invoice (it's just that the VAT is stated separately as well as included in subtotal items which was confusing me). This isn't how I'm used to seeing UK invoices, always the subtotal is excluding VAT, the VAT is then stated and the final total includes the VAT. Zen Cart displays the tax very oddly but I'm wondering if there's an option which can override this display preference somewhere and I've just not found it yet.