I have raised the issue with Zimbra support and they are currently looking into it. Worryingly, their engineer is starting to poke fault at the IMAP protocol itself and is saying it might not be fixed:
"I have done the tests and what I have found out that it is an issue with IMAP protocol. In imap it downloads only the headers, so moving a header is not equivalent to moving a message. Hence when you move a folder in imap it does not sends any request to ZCS server for the move soap request."
Also please understand this is not a issue with zimbra, it is how imap protocol works. We are not having any control over the functionality of imap we are just using the imap protocol as defined.
I doubt this can be fixed as it is dependent on an product which we are not in control of. I will still open an internal escalation on your behalf and wait for managements decision.
As Zimbra has worked fine with IMAP up until the recent version, I imagine this is a recent bug introduced into 8.8.x. If Zimbra cannot (or chooses not to) support IMAP properly then I am not sure what future it has a mail server?
Is anyone else also experiencing this issue?