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The chairman of the Brexit Party is threatening to sue an SNP MEP over comments he made about party funding.

During a television interview, SNP member Alyn Smith described the Brexit Party as a "money laundering front".

Chairman and newly elected MEP Richard Tice then instructed lawyers to contact the politician demanding he retract the "false and highly damaging" claim.

Mr Smith responded by calling for a "full, open and transparent independent inquiry" into the party's funding.

The row centres on comments Mr Smith made shortly after he was returned to the European Parliament as the SNP's lead candidate for the Scotland constituency.

Speaking on Sky News, he said that "the only question about the Brexit Party now is which laws they've broken and where their campaign finances have come from".

He added that the party - which is led by Nigel Farage - was "a shell company that's a money laundering front".

Mr Tice instructed legal firm Wedlake Bell to contact the MEP demanding an apology, saying that the claims were "utterly false and highly damaging".

They said that "any viewer who was aware that Mr Tice was the chairman of the Brexit Party would conclude that you were alleging that Mr Tice is himself running a money laundering operation".

They added: "Your allegation is categorically denied. The Brexit Party has not acted as a money laundering front and Mr Tice has no involvement in money laundering or any other law breaking.

"Mr Tice is deeply affronted by the accusations you have made against him and the Brexit Party. Clearly your political viewpoint is different from his, but that can be no excuse for making such a very serious and totally unfounded charge of criminality against our client."

The firm said that unless Mr Smith "set the record straight" before noon on Thursday, "Mr Tice will have no option but to instruct us to bring High Court proceedings against you".

In response, Mr Smith said he had referred the firm to the case of Goldsmith and Another v Bhoyrul and Others - a 1997 case which established that political parties do not have the power to sue in defamation proceedings.

He said: "Like many others, I would like to see a full, open, and transparent independent inquiry into the funding of Nigel Farage and the Brexit Party."