VitUR - Here is a post from Apple Forum from 2013 outlining the problem.
https://discussions.apple.com/thread/4191093
I pasted this particular reply as it's exactly what I mentioned...
"For what it's worth, I recently bought a Pure i-20 dock through which I play my iPod. This suits me because I don't use the iPod as a mobile device with earphones. I play it through my stereo system at home.
I have noticed a considerable improvement in sound quality since I started using the Pure dock. This is because it bypasses the iPod's built-in chip and accesses the original sound files. So, the better the original quality of the digital file, the better the sound that emerges from my speakers. A lot of my files are Apple Lossless and these sound really great. But even mp3s at 320kbps are noticably better.
The only way to describe the difference between the iPod linked directly to my system, and via the Pure dock, is that the sound from the dock is vibrant whereas the iPod on its own produces a flat, lifeless sound. With the dock I can hear details that are just muddy with the iPod.
The iPod is great and iTunes is brilliant. But for good audio quality something else must be added to the mix. "