I have no idea what you mean by is it harmful to them, but >> http://connect.lulu.com/en/discussion/33384/royalties-and-tax-withholding
It has always bugged me that the law in the USA says that companies can withhold the tax of people that are not even on their payroll. In the UK one is paid the full amount, and then it is up to use to declare the earnings once a year and pay the IR what is due. That applies to all taxes due in the UK.
Only when one is actually on the payroll of a company here do they deduct what is due and hand it to the IR.
As far as I know, that applies to everywhere but the USA.
It would help if Lulu made it easier though. On Amazon there's a simple electronic 'I am not a US citizen' form to fill in, and that's it.