Are you on cash accounting for VAT? If so, VAT needs to be recorded on the payment itself. If it’s a different rate to the invoice, this will be adjusted when it’s assigned.
If you view the invoice, you will see a “Log Payment” option at the top:
Clicking this will reveal an option to “Assign from credit”
The other option is instead of applying to an account, you could mark it straight off the invoice when tagging. When you enter the clients name you should also be given a list of outstanding invoices to apply it to.