AddressPal Withholding VAT on Refund

https://www.boards.ie/vbulletin/showpost.php?p=112566921&postcount=2601

I posted above in Home>Topics>Business & Finance>Consumer>Online Buying & Auctions>Couriers and while specific to AddressPal is an inactive subforum so likely get a more experienced response here.

In summary AddressPal lost/stole an item I had delivered to them on 11-Nov-2019 and for over 3 months I've been chasing them for the item and thereafter a refund. I finally received a cheque in EUR proclaiming to cover the GBP cost of said item but when I queried the amount this is the response I got:

"Please be advised AnPost only pay compensation for the actual cost of the contents. The amount was converted as of 7/11/2019 when the item was purchased.

The cost price on the invoice is £... +£... shipping converted to Euro equates to €... There is Tax on the invoice which is not included in the refund."

The cost withheld is 20% UK VAT paid on the item so how can AnPost claim not to refund this?
Surely they should have to replace like with like. The product I bought back in Nov has since increased in price 11.3% plus the Nov FX rate AnPost are using of 1.16197 despite only issuing the cheque last week is also adding a further 3.25% increase to the replacement cost. I can accept the product price increase it somewhat out of AnPost's control but not the VAT withheld or the favorable FX rate used on a recent cheque.

Not a happy customer and trying to deal with AddressPal has been an absolute disaster on every front. What else can I saw to get them to refund in full before lodging a complaint with the ombudsman or equivalent?