Creating a 10% coupon screws my VAT calculations

I have created a 10% discount coupon, it calculate just fine for other countries around the world however when it calculate for the UK and includes VAT it seesm to miscalcuate.

VAT = 17.5%

here is a typical shopping cart,

£57.60
Sub-Total:

£5.00
Zone Rates (Shipping to GB):

-£5.76
Discount Coupon: couponword :

£8.06
VAT:

£64.90
TOTAL

The VAT calculated should be £9.95 surely? As the quantity and value gets larger so does the incorrectness of calculation, please help if you can thanks.

and for completeness if I remove the Discount coupon this is the result of the shopping cart

£57.60
Sub-Total:

£5.00
Zone Rates (Shipping to GB):

£10.08
VAT:

£72.68
Total:

Which is absolutely correct, so why would a 10% coupon cause this anomolly?

Well there seems to have been a breakthrough, if I set the ot_coupon to credit note instead of standard the correct shopping cart is calculated

£57.60
Sub-Total:

£5.00
Zone Rates (Shipping to GB):

-£5.76
Discount Coupon: couponword :

£9.07
VAT:

£65.91
Total:

I thnk the VAT is now correct, 17.5% of £51.84 = £9.07

Only one query then, what does the ot_coupon 'credit note' setting do, and how will it affect the rest of the transaction?

NB - I also chose VAT as my tax class (One i Had created at 17.5%)