Thanks for your reply FJR.

Using Outlook (2013) with multiple e-mail accounts only one account I can manage to have hierarchical folders. The other accounts, even creating a new account I cannot manage to create hierarchical folders.

How can I fix this?

 Mat 

I do not seem to be able to create folders beneath other folders from my mail client (Thunderbird).

A tool I use says that all folders have  NoInferiors set which I believe is the issue.

Is this possible with Mecury?
 

You can have hierarchical folders, but folders that have subfolders cannot have messages within them.

OK, but how do I enable this.

Somewhere I need to stop every folder having /NoInferiors set

I cannot find reference to this in any documentation 

Mercury/32 IMAP4 does not support folders that contain both messages and sub-folders.  Thunderbird needs to be setup properly in Account Settings | Server Settings | Advanced.  The box marked "This server supports folders that contain sub-folders and messages" must not be checked since this is not supported.  This will allow you to create a "Folders only" folder that can contain other folders.

Were in Outlook can you configure this?

Mat 

It seems to me, that Outlook 2010 automatically checks it.