A campaign to leave the European Union which was fronted by Nigel Farage and Arron Banks is facing an investigation into “potential offences under the law” over its referendum spending returns.
The official elections watchdog said it had decided to investigate Leave.EU following an assessment that there were “reasonable grounds” to suspect the law had been broken.
In a statement, the Electoral Commission said its inquiry would focus on whether the campaign group had received “impermissible" donations and whether its spending return was incomplete.
Today's announcement is politically motivated and the timing is intended to cause maximum damage just before the General Election
Arron Banks, Leave.EU chairman
It said: “The Electoral Commission has begun an investigation into Leave.EU's EU Referendum spending return.
“This followed an assessment which concluded that there were reasonable grounds to suspect that potential offences under the law may have occurred.
“The investigation is focused on whether one or more donations - including of services - accepted by Leave.EU was impermissible; and whether Leave.EU's spending return was complete.
“Once the investigation is complete, the commission will decide whether any breaches have occurred and, if so, what further action may be appropriate, in line with its enforcement policy.”
Leave.EU was originally set up by the millionaire UK Independence Party backer Mr Banks and had the support Mr Farage, the party's then leader.
It failed to win the designation to be the official Leave campaign in last year's referendum, losing out to the Vote Leave group spearheaded by Boris Johnson and other prominent Conservatives.
The Electoral Commission has previously announced that it is investigating the spending returns of both Vote Leave and the official Remain campaign, Britain Stronger In Europe, as well as a number of other groups involved in the campaign.
Leave.EU declared spending of £693,022 - close to the legal limit of £700,000 for the non-official campaign groups.
Leave.EU chairman Mr Banks claimed that the announcement from the watchdog was “politically motivated” and intended to “cause maximum damage” before the election.
He said: “Today's announcement is politically motivated and the timing is intended to cause maximum damage just before the General Election.
"We will not be co-operating any further with the Commission and we will see them in court.
"We have always said the Electoral Commission was the unofficial arm of the Remain campaign and they have proven our suspicions correct again today.
"It is however, worth noting that the Electoral Commission chose to ignore our complaint that the Commission allowed the government to issue a Remain campaign leaflet to every UK household packed with government-generated lies at a cost of £11million.
"The leaflet did not carry the legal imprint required and was delivered in Wales after the short period started because they forgot to translate it into Welsh! In effect, the government smashed the rules with the help of the Electoral Commission.”
Mr Banks is hoping that he will be approved on Wednesday next week as the UK Independence Party candidate for Clacton.
Mr Banks is due to meet with Ukip councillors on Monday in Clacton and has taken a lease on former MP’s Douglas Carswell’s shop in the town to be his campaign offices.
The former Ukip donor is due to meet with the party’s National Executive Committee on Wednesday for a hustings.
Andy Wigmore, a close associate, said Mr Banks will campaign the help of a pirate radio station broadcasting election messages from a former fishing trawler off the coast of Clacton if he is selected.
A trawler had been donated by pro-Leave supporting fishermen and could start broadcasting within weeks to the people of Clacton.
Mr Wigmore said: “It will not be Ukip FM. We are launching a pirate radio station for the election because Clacton is famous for its pirate radios.”
Pirate radio stations broadcast off the coast of Essex in the 1960s and 1970s. In 2014 pirate radio museum has opened on Clacton seafront.