The problem is usually not the location of the item, but the fact that the seller is in China. (China is usually the problem!)
Overseas sellers are allowed to have a distribution base in the UK, which allows them to list items as UK stock.
However, it isn't always clear that the the seller is registered in another country - sometimes you can only tell by viewing the seller's feedback page. It's especially important to know when buying from a seller in China, as regardless of where the item was located there is a risk that items may not comply with UK safety standards. Plus, you won't have any UK statutory consumer protection, or it will be unenforceable.
If an item is misrepresented as being located in the UK, but is actually send from China, this is reportable to eBay using the reporting link provided in every listing (far right, opposite Postage and Payments).
Report Category: Select 'listing practices'.
Reason for Report: Select 'other listing practices policy violations'
Detailed Reason: select 'Item location misrepresentation'
If the item location is stated to be in the UK, you do NOT have to return it to China in the event of an eBay money back guarantee claim. EBay will require the seller to send a prepaid return label to their UK address. If it was stated to be located in China you may have to pay the return postage yourself.
