If you buy a complete bike, you pay duty. Buying parts, not so much, although there have been a lot of threads about some of the common UK stores (Wiggle, PBK, etc) are using shippers that cause duties to be collected. I ordered stuff from UK several years ago and paid no duties.

One drawback of purchasing a bike from UK is who pays freight if it arrives damaged and needs to be returned?

I've had excellent experiences buying from Bikes Direct. I shopped my LBSs extensively but couldn't beat the price to quality of my Motobecane Gran Premio. With competitive specs to the LBS bikes (105 brifters, derailleurs, cassette; Tektro double pivot brakes; FSA double crank; Entry level wheels with Mavic CPX22 rims) the MB GP came in $250-$400 less than the LBS competitors. Since I do all my own work, setup took a couple of leisurely hours one evening and I've had absolutely zero problems with the bike. I did swap saddle and stem based on personal preference (something that would likely have happened with any of the LBS bikes as well) and eventually built myself an upgraded wheelset (the originals worked fine and are still on my Plan B/Trainer bike. The wheels on the LBS bikes were no better at this price point. I just like building wheels). If I had held out I might have been able to find a last year's model or closeout for a similar price at the LBS, but waiting for a leftover that may or may not be available in my size was not an option in which I was interested.