Ok, let's talk purchases. When you buy something (wood, screws, whatever), you should get either an invoice and/or a receipt (depending where you buy it from). On there it will say something like:
Wood £200
VAT £35
Total Cost £235
You need to keep a record of the £35, as this is VAT which you have paid (it's 17.5% of the £200 price of the wood).
Say you then make something with the wood, and sell it for £300 (net). You will produce an invoice for the customer which will say something like:
lovely wooden thingy £300
VAT £52.50
Total cost £352.50
So your customer will pay you £352.50 (it's important that your boss understands that the cost to his customers will go up, as they will have to pay the VAT in addition to whatever he would otherwise have charged).
When you do the VAT return you will have to declare the £35 as input VAT (VAT on things bought to use in the business) and the £52.50 as output VAT (VAT on things you have sold), and you will pay the difference of £17.50 over to the VATman.
And here endeth the lesson .