Hi tt2, everyone,
No malware or vpn present, and rebooting router didn't help.
However - I did solve the issue.
I had a spare 15" A1286 Macbook pro running sierra. I don't use it as there are ram slot issues on the motherboard, which cause constant hardware crashes.
I swapped the HD of my normal daily 13" laptop into this 15" laptop. When it started up, I plugged the iphone 12 into the 15" laptop. This triggered the software update process, which made it possible to see the iphone 12 on this machine. Itunes didn't need to be open - it just triggered an update from the finder.
I then swapped the HD back into the 13" laptop, as well as cleaning the USB contacts thoroughly with isopropyl alcohol.
Upon restarting the 13" laptop, and starting itunes, it now recognises the iphone 12, and I've been able to back up and sync.
I suspect the issue might have been as simple as dirty ports on the 13" laptop. The 15" (other than being crash prone due to the motherboard issue) was a lot cleaner and well kept. Perhaps the new iphone 12 requires a more consistent voltage compared to the old iphone 5?
Quite an involved process, but maybe try cleaning the usb ports first. I also spoke to Apple support about this issue.
Running high sierra, and itunes 12.8.2.3 with ios 14 and and iphone 12 IS a supported configuration, and will work, as long as there are no hardware issues (eg bad cable, dirty ports).
Cheers