The leader of the Conservative MEPs, Giles Chichester, has channelled almost £500,000 in parliamentary allowances through a family firm founded by his father, the yachtsman Sir Francis Chichester.

Company documents reveal that since 1996 Chichester has paid the company £445,000 for services “in connection with secretarial and assistant services for the European parliament, constituency and committee work”.

Chichester has been in discussions with the parliament over whether the payments represent a conflict of interest.

Some of it – from an annual MEP staff allowance of about £160,000 – was previously made through the firm to staff, including his wife, to carry out secretarial services. But in recent years he has stopped paying staff through the company – because he says it attracted too much Vat – while continuing to make the parliamentary payments to the firm.

Francis Chichester Ltd – named after the MEP’s father who sailed single-handed round the world in 1967 – describes its activities as “the publication of maps and guides and the business of navigation”.

When questioned by The Sunday Times in March about the precise services the shop provided for the annual payments of £20,000-£30,000, Chichester replied: “I don’t think I need to go into great detail.” Asked again last week, he replied that it provided “secretarial services”.

Chichester pays his wife Virginia a separate annual salary of £20,000-£30,000 as a part-time assistant. He has also declared a full-time research assistant and three other “service providers” – an accountant, press officer and political agent are paid from his annual secretarial allowance.

Last week the European parliament would not comment on individual cases but sources confirmed that, under its rules, “using a service provider that is a family company where the MEP is a paid director would constitute a conflict of interests”.

Chichester’s spokesman initially responded that he had informed the parliament six months ago that he may have a conflict of interest but he had not yet received a reply. In a later statement, a Conservative party spokesman claimed that parliamentary officials had contacted him 18 months ago but had not followed up on his replies.

The revelations come in the wake of a secret auditors’ report on MEPs’ expenses that revealed widespread abuse of the system.

In April this year Chichester disclosed on his parliamentary declaration that his firm was a service provider receiving between £20,000-£30,000 from his secretarial allowance.

Previous declarations, dating back to 2004, did not mention the company or his wife.

His disclosures came after inquiries from The Sunday Times and coincided with an April deadline from David Cameron, the Conservative leader, on MEPs to disclose the names and salaries of their staff to help restore public confidence.

Since 1996, while recording a net loss, the firm has received annual payments ranging from £23,057 to £52,745.

Over the same period, company directors have received £158,938, with £47,792 paid out since 2002 when Chichester and his wife were sole directors.

The company also shelled out £40,000 in rent to Chichester in annual payments of £5,000 between 1996 and 2003.

The rent was for office space at St James’s Place, London – the same address given by Chichester and his wife.

Neil O’Brien, director of Open Europe, a think tank, said: “Parliament should act decisively to ensure its expenses system is not open to any form of abuse.”

Despite Cameron’s pledge to clean up MP and MEP expenses, he declined to comment.

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