When sending a test event I’m able to receive everything, but when running virtual terminal in sandbox and processing a sale it doesn’t send any data. Also, the sample doesn’t appear to have any items in it, does this not pass items? If not, what webhook can I use to pass this data for every transaction (sale or refund) made?
Are you subscribing to Terminal webhook? If so those are only for Terminal API, not the Virtual Terminal. If you would like to get events for Virtual Terminal you can subscribe to payments webhooks. 
Is the terminal webhook used for point of sale in store? If so, how can I test this in sandbox?
No, the terminal webhooks are just for Terminal API checkouts. For in person payments you will still want to use payments webhooks.
Thank you, however I noticed payments doesn’t break down the items purchased via the Point of Sale system, is there a better route to go to do this, or should I just use the order id and trigger a lookup through the orders endpoint, then use the item endpoint to pull the item skus?
That’s the way you will need to get the itemized detail from orders taken with the Square Point of Sale. There isn’t an alternative way to get the information at this time.
Ok, thank you again!