Cisco 7640 No Hold or Transfer on inbound calls


I have been having problems with my Cisco 7940 phones.

They are running SIP V8.2.

When an incoming call comes to the phone and it is answered its all fine. I then press hold and the phone puts the call on hold but does not notify Asterisk so no music on hold. Also both transfer and blind transfer dont do anything.

Funny thing is that if I call out from the hand set (even to another 7940) they all work fine. It appears to be the 7940 doesnt work correctly when it has received the call, yet does if it orgionated the call.

Is this a bug with the 7940 or a simple setting I am missing?