If anyone can point me to what Im missing please do.
no. 1 putting code in code tags
notice how all the necessary indenting is now lost

Code:
wsave VAR BYTE $70 SYSTEM
 LED1 VAR PORTB.1


 INCLUDE "DT_INTS-14.bas" ' Base Interrupt System
 INCLUDE "ReEnterPBP.bas" ' Include if using PBP interrupts



 CMCON = 7
 TRISB = 0
 ASM
 INT_LIST macro ; IntSource, Label, Type, ResetFlag?
 INT_Handler TMR1_INT, _ToggleLED1, PBP, yes
 endm
 INT_CREATE ; Creates the interrupt processor
 ENDASM

 T1CON = $31 ; Prescaler = 8, TMR1ON
 @ INT_ENABLE TMR1_INT ; enable Timer 1 interrupts

 Main:
 PAUSE 1
 GOTO Main

 '---[TMR1 - interrupt handler]--------------------------------------------------
 ToggleLED1:
 TOGGLE LED1 
 @ INT_RETURN
no 2. posting complete code

the "configuration word/s" are a vital part of pic code , having to speculate makes diagnosis a hit and miss affair

no 3. posting a sketch/description of your setup
led1 is on what pin? , what resistor? . is mclr high ? , what vcc ? , xtal /ext clock/intosc ?