Universal Control - Shift key not working with iOS 16.3.1 & MacOS 13.2.1

I’ve noticed this a more and more over the last few weeks, shift key doesn’t work in Universal Control with iPad from Mac.

The only fix that I can find that sorts it, also breaks so much more, and that is / accessibility / keyboard / full keyboard access = on

But that fix introduces more issues than it fixes.

Any other suggestions?

Additional info
Keyboard = Apple Extended Keyboard with TouchID

I have the same issue, turning on full keyboard access add the blue borders around all the windows which is annoying.

Look forward to someone suggesting a solution,

I found the issue, if you have a non apple Bluetooth pointing device connected to you MacBook (in my case Logitech MX Master) this bug happens.

I simply changed to using the unifying receiver and all is fine.