A public relations advisor failed to pay almost £100,000 in tax after spending the money on "himself, his family and his business", a court heard.
Richard Hillgrove, 42, is accused of failing to pay HM Revenue & Customs (HMRC) £52,000 of VAT charged to customers of his company in 2011 and 2012.
Bristol Crown Court heard Hillgrove, of Somerton, Somerset, deducted £41,000 in taxes from the wages of his employees during the same period but also failed to pay this to the HMRC.
A jury of five men and seven women was told Hillgrove's firm, Hillgrove Public Relations Limited, had experienced "cash flow issues".
But Hillgrove "failed to grasp" the economic state of his company and repeatedly withdrew too much money from it, prosecutor Joss Ticehurst said.
Money that should have been paid to HMRC was instead used for "extravagant" purchases - including hotels, restaurants and fees at Millfield School, he told the jury.
Hillgrove denies two charges of cheating the public revenue - one relating to VAT and the second to PAYE and National Insurance - between March 1 2011 and June 12 2012.
"Mr Hillgrove is a public relations man. He appears to be good at what he does. He obviously works and he gets paid for that work," Mr Ticehurst said.
"But what he is not good at doing is paying the tax that is due to HMRC. Mr Hillgrove took the money that was meant to go to the tax man and spent it.
"Mr Hillgrove took the decision not to pay the money to HMRC and in so doing so, was dishonest. He ought to pay it to HMRC, knew this and chose not to."
Mr Ticehurst said that between March 2011 and May 2012, Hillgrove's customers were billed for work he carried out plus VAT.
However, the VAT receipts - which added up to around £52,000 - were not declared to HMRC and Hillgrove's company failed to complete a tax return, he said.
"He did that for his own advantage," Mr Ticehurst said. "He kept the money that ought to have been paid over."
During the same period, Hillgrove allegedly deducted taxes under the Pay As You Earn (PAYE) scheme and National Insurance from employees at his PR firm.
But instead of forwarding the money - a total of £41,000 - and collecting to HMRC, Hillgrove kept it for himself, Mr Ticehurst said.
"Employees had been told on their pay slips 'that's how much is going to HMRC' but the money that ought to have been sent was actually being spent on Mr Hillgrove or his business," Mr Ticehurst
Mr Ticehurst said that in November 2010, Hillgrove - trading under the company name RJH Management LLP - changed his accounting firm to Bishop Jones Chartered Accountants.
The switch came after an "apparent failing of the previous accountant", which left Hillgrove unaware of what money could be taken out of the business, Mr Ticehurst said.
By January 2011, it became clear Hillgrove's company, RJH Management had not been paying the HMRC fully for VAT and PAYE.
On January 20, a meeting took place between Hillgrove, Bishop Jones and the HMRC in which an agreement was made for the debt to be paid in instalments, Mr Ticehurst told the jury.
That month, Hillgrove created a new company, Hillgrove Public Relations Limited. "It was the same company as RJH Management, it was just a different entity," Mr Ticehurst told the jury.
He said Bishop Jones regularly contacted Hillgrove with updates on his growing tax bill and the need to complete a tax return.
"Mr Hillgrove was being told by Bishop Jones what he owed and what to pay," Mr Ticehurst said. "He didn't pay it."
The court heard Hillgrove had three bank accounts - two business and one personal.
"Money was being transferred out the business and into the personal," the prosecutor said. "The level of spending by Mr Hillgrove was far in excess of what was affordable when the HMRC was due money."
He said money was spent on accommodation, wages, restaurants and school fees.
"This type of extravagant spending when the HMRC were owed money was totally unnecessary and unwarranted," Mr Ticehurst said.
"Trim down expenses and then maybe the HMRC will be satisfied.
"It was his behaviour, his spending of the money that meant the HMRC didn't get the money. Any suggestion by Mr Hillgrove that he wanted to pay, that he intended to pay, isn't right."
Hillgrove was interviewed by the HMRC and a tax return was finally submitted but this has never been paid, Mr Ticehurst said.
"He was failing to pay what he knew he owed because he was spending money on himself, his family and his business," he added.
In interview, Hillgrove insisted he was simply trying to "buy time" by not paying the debt and had always intended to pay the bill, the court heard.
Hillgrove, who is representing himself in court, told the jury: "I'm not a tax fraudster, I have never been a tax fraudster. I've always wanted to pay my tax."
The trial, expected to last three weeks, continues.