Subtitles not showing up in iTunes/Apple TV

OK - this is really driving me crazy now. Can anyone help Pleeease? I can't seem to get Movies/TV shows that I have ripped to display soft subtitles either in iTunes or Apple TV2.

I have ripped them with handbrake to AppleTV 2 settings and included the subtitles I want and then drop the resulting file in to iTunes and...no subtitles. Likewise on Apple TV2 there are no subtitles available when pressing and holding the centre button as they are with iTunes store bought products.

I know they are there because I can select them in other media players like VLC, MPlayerX etc. All i get in iTunes in the bubble in the bottom-right is "Prefer AC3 Passthrough" tick box. Movies/shows bought in iTunes display available subtitles no problem. I could hard-burn the subtitles in but I would much prefer to have the option to be on or off.

Does anyone know what I can do to get subtitles to show up? My wife is Danish and I am English and being able to watch each others country's movies/shows is really important to us. Thanks in advance for your help.