2018 Mac Mini and Magic Keyboard 2 weirdness

OK so I have a nice new Mac Mini 2018 model. Really loving it as it's my photography editing machine and I use a Wacom tablet with it for some free-hand drawing.

I decided recently to grab a Magic Keyboard 2 and swap out my full size wired Apple keyboard. Well I'm now thinking it was a mistake. It works faultlessly as a wired keyboard but when I unplug it....it does not work. The weirdness is, when I'm doing the connection process it reports its connected via Bluetooth. It states quite plainly that you can now use the keyboard as a fully connected device. No I get nothing. I press the caps lock key and nothing. I type into Safari, nothing.

As a test I connected it to my Wife's Macbook Air. It took 2 secs and it was connected via Bluetooth and worked faultlessly. Tried my Mac Mini....nothing. Says it's connected. It isn't. Or if it is, the keystrokes take a few hours to register.

Anyone else had this one?