Email reply creating new incident not appending to existing incident

I have a new installation of Sd 7.5 SP1

I am processing email from an inbox and sending out email notifications using rules and templates.

The documentation says that any reply to these emails should get associated with the ticket automatically but every reply sent in just creates a new incident.

Looking at the email monitor project it would seem the email should have a {IID xxx} entry when sent out but doesn't seem to contain this.

Any thoughts anyone?

Thanks

Steve