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WordPress pages break with custom permalink settings (theme directory not output)

We have a site under development which works fine locally, however when uploaded to our server using the permalink settings %postname% the correct URLs are rendered in the menu but in all pages other than home no WP theme URL is output

for example: http://distinctivepeople.co.uk/wp/ works fine
http://distinctivepeople.co.uk/wp/who-we-are/ does not output the theme directory so renders unstyled HTML

This works fine under default settings p?=123 etc but we need proper URLs.

This is hosted with 123-reg who don’t believe there is a server issue – previously similar has happened if .htaccess is not being read by the server but I’m told this is not the case.

Any help appreciated!