  We discuss the origin of the soft X-ray excess seen in AGN. There are clear
advantages to models where this arises from atomic processes in partially
ionised material rather than where it is a true continuum component. However,
current data cannot distinguish between models where this material is seen in
reflection or absorption, even for the archetypal 'reflection dominated' AGN
MCG-6-30-15. Instead, we give physical arguments on the ionisation structure of
X-ray illuminated material which exclude a reflection origin if the disc is in
hydrostatic equilibrium. The same physical processes strongly favour an
absorption origin for the soft excess, giving a more messy picture of the
accretion environment. This implies that these apparently 'reflection
dominated' AGN are not good places to test GR, but they do give insight into
the spectra expected from the first QSO's in the early Universe.
