A Ukip-dominated group in the European Parliament misused around half a million euros of EU funding in a bid to help the party win Westminster seats in last year's general election and boost its Brexit campaign, according to a leaked audit.
The external audit, obtained by Sky News, said spending on polling in key target seats and ahead of the EU referendum broke rules which say the money must be spent on European Parliament business and not on domestic campaigns.
If the European Parliament Bureau upholds its findings in a meeting on Monday, the Alliance for Direct Democracy in Europe could be forced to pay back tens of thousands of euros.
But the ADDE - a grouping which includes MEPs from seven countries but has a large Ukip majority - said its spending was "fully eligible and compliant to EU regulations" and it would challenge the audit in the European Court of Justice.
A Ukip source said that the party had not misspent any money, as financial expenditure was "the full responsibility of the ADDE group, no-one else".
According to Sky, the audit report found that ADDE financed polling in the UK between February and December last year, including pre-election surveys in Thanet South, where Nigel Farage unsuccessfully stood for Parliament, and Ukip target seats Great Grimsby, Thurrock, Rochester & Strood and Cardiff South & Penarth.
The audit put the ADDE's total misspend at more than 500,615 euros (£430,486) and an EU spokesman told Sky the "lion's share" was by Ukip, at more than 450,000 euros (£386,961).
The report concluded: "The constituencies selected for many of the polls underline that the polling was conducted in the interest of Ukip.
"Most of the constituencies can be identified as being essential for reaching a significant representation in the House of Commons from the 2015 general election or for a positive result for the Leave campaign."
If the bureau agrees with the auditors' conclusion, the ADDE is understood to be facing repayment demands of more than 170,000 (£146,185).
A spokesman for the ADDE said: "The parliament administration has for months taken an aggressive and hostile attitude over the audit, amounting to nothing short of deliberate harassment. This is a blatant deviation to its requested neutrality.
"We have responded to their queries with a mass of information and explanation justifying our activities and expenditure. They have simply ignored our submissions and in several cases these submissions having been made repeatedly on their request.
"They have broadened ex-post the definition of 'expenditure supporting a political party' so widely as to deny us the right to undertake any activity which might be remotely interesting to ADDE members.
"It has become increasingly apparent since Brexit that anything short of 'group think' is no longer tolerated within the European Union. Any deviation will see the rules changed and goalposts moved.
"Everything the ADDE has conducted is to provide a more coherent overview of the opinions expressed by the population that is represented by the members of the ADDE.
"We are therefore confident that our expenditures - with the exception of a few minor items - are fully eligible and compliant to EU regulations. They are also in line with fully accepted activities from other groups.
"We will be taking this matter to the European Court of Justice."