There are certain transactions on House Sales Journals that use the VAT code S0 - Sales Zero Rated.
This code when setup to be Output and Returnable but no Recoverable.
If may find that certain line for example Incentives appear as S0 on the VAT Return Report as an Recoverable Inputs instead of Returnable Output. This is controlled by the House Sales Parameter JNLIOV. When this is set to N then combined Input/Output VAT codes are used meaning that the addition/deduction flag on the HS Journal line is used rather than using the VAT code setup.
When the parameter is set to Y then the system will use the setup of the VAT code to determine whether the VAT transactions are input or output transactions when posting VAT transactions from House Sales Journals.