What do the tiler/ plumber suggest

I was assuming the builder had liased with the tiler when making the recommendation as he has been the one co-ordinating and we haven't really had any contact with the trades as we are living off site. He works very closely with all his trades and I always feel like they discuss issues together without us when we raise opinions and so therefore are on the same side. I guess I just wanted any other opinions which I could use as back up when I raise the issue again. The tiler apparently doesn't normally do mitred edges and the builder did not have much experience with them either so its not something they are hugely familiar with.

From our experience builders are not big fans of shower niches, particularly if located close or directly under the shower head. From the builder's pov, a niche is more likely to leak and cause a call back during the warranty period (assuming the work is warranted). Grout is porous and therefore will allow water/moisture to penetrate to the substrate, which may cause an issue on a mitred joint. Understand your issue, particularly if the niche is in line with the grout line of the tiles abutting it; the change of substance from grout to sealant will be noticeable.

Common practice for corner joints is that the tiler would use some form of extruded aluminium or plastic profile to act as a flashing and to also help align the tile joint. The flashing will help prevent moisture from penetrating the substrate, however a caulked joint will be far more effective. Would suggest using a hybrid sealant instead of a silicone based caulk. The hybrid product is better performing. Use a sealant that is colour matched as close as possible to the tile or to match the grout used elsewhere. Good luck.