When I raise an invoice within the Projects module and transfer it to AR, it is not applying the VAT

When I raise an invoice within the Projects module and transfer it to AR, it is not applying the VAT to the AR invoice.The project has correctly been set up within Project Governance; Billing Information\Billing Setup with the tax classification populated here. I have also tried assigning VAT to each line item in AR before the Auto Invoice program is run but this doesn't work either.