Robert_de_Vries and umutalparslan
Since we removed Parallels Toolbox (puts a drop down menu in the top right of the menu bar) this has completely resolved our problem.
If not running this, are you sure you don't have another clipboard or keyboard utility that could be giving similar problems?
I'd recommend starting up in Safe Mode (https://osxdaily.com/2021/02/09/how-boot-safe-mode-m1-mac-apple-silicon/) and seeing if the problem persists. If not, then there is likely some software conflict going on.
An alternative is Jump Desktop is our server RDP management tool, which will also run RemoteApp workspaces. Workspace rendering isn't so good as Microsoft Remote Desktop unless the Quality is set to 'Very High - 24 bit color' and Performance is set to 'High Quality Fonts' and 'Use Bitmap Caching' is set in the workspace preferences'. Of course Jump Desktop isn't free, but it is worth the money and perhaps worth downloading the trial copy - available from the https://www.google.com/url?sa=t&rct=j&q=&esrc=s&source=web&cd=&cad=rja&uact=8&ved=2ahUKEwisps_hhOD6AhWknVwKHS7FAkgQFnoECA0QAQ&url=https%3A%2F%2Fwww.jumpdesktop.com%2F&usg=AOvVaw1XdonDRqijnasleRydl-Kk and also the Apple App Store (with the usual multiple computer installations within the App Store licensing rules).
We appear to have lost 2-way communication with the Microsoft Mac Development team since moving to this platform from HockeyApp and we're also seeing old bugs previously removed, now raising their heads again, but not with this particular problem.