I've worked out what the problem is - but I don't know the solution to it
It so happens that all other accounts on the server are admin accounts - these all work fine. I've just tried adding a normal account to another domain and get the same problem - it creates the Maildir in an extra user folder within the username folder.
Is this because I have the mail location in dovecot.conf set as:
mail_location = maildir:~/user/%u/Maildir
However, if this is the problem what is the correct path as that is the only thing that works for all my other (admin) email accounts?