Den Dover, the former chief whip for the Tories in the European parliament, has paid for two cars worth £65,000 using a family company bankrolled out of parliamentary expenses.

Dover has been paying up to £100,000 a year in European Union allowances into the family firm MP Holdings. The money is mainly intended to meet staff costs, but the company, run by his wife and daughter, has paid for at least two cars, believed to be BMWs.

Neighbours say Dover and his wife have been driving a saloon and a silver 4x4 since he won his seat in Brussels. Dover has already admitted using expenses for building work on his two homes in England and now faces questions over the use of allowances to pay for the vehicles.

Several MEPs were interviewed last week by Hugh Thomas, the “enforcer” whom David Cameron sent to Brussels to investigate the lax expenses regime. The party has been engulfed in an expenses row since Giles Chichester resigned as the Conservative leader in the European parliament after channelling £445,000 of expenses via a family firm.

The parliament is under pressure to do a radical review of the expenses system. A document on the rules for MEPs’ expenses shows they and their spouses are entitled to claim for a wide range of medical treatments, including antenatal gymnastics, mud baths and a 21-day thermal procedure.

Up to £160,054 can be paid for staff annually, £38,340 can be claimed for office costs and £82,490 for subsistence and accommodation. There is, however, no detailed auditing of how the money is spent.

Dover is said to have channelled up to £750,000 of his expenses into the family firm, which was used as a “paying agent” and “service provider” for the European parliament.

According to the accounts of MP Holdings, at least one car worth £20,970 was acquired in 2001-2. Two years later, at least one other vehicle was acquired, worth £45,644. The cars are kept at the company’s headquarters – Dover’s £800,000 family home in Hertfordshire.

MP Holdings also spent about £32,000 on repairs to the Borehamwood property and another home in Chorley, Lancashire. Dover says he has not broken any rules because, unlike Chichester, he has no interest in the family firm, having resigned as a director in 1999.

The European parliament would not comment on Dover’s claims. Companies contracted by MEPs to pay staff and provide services can claim some transport costs, but parliamentary press officers were unable to say whether this might include the acquisition of two BMWs.

Dover, 70, who started his career in the construction industry, is a political veteran, having been an MP from 1979 to 1997. He has used the generous allowances to employ his wife, Kathleen, who is paid up to £40,000 a year as a secretary, and his daughter Amanda, who is paid up to £30,000 a year.

Kathleen and Amanda Dover are rarely spotted in the parliamentary offices in Brussels or Strasbourg, but both are also said to have constituency duties. Amanda works for most of the week at a travel agency in Radlett, Hertfordshire, but refused to comment on her parliamentary role.

The latitude and ambiguity of the parliamentary rules on expenses has been highlighted by a number of claims in recent years. Last weekend The Sunday Times revealed how the Tory MEP Sir Robert Atkins attended his son’s wedding in America while on an expenses-funded trip to visit Republican politicians.

Cameron is determined to ensure his MEPs become more accountable over their expenses and last week Thomas, the party’s head of compliance, was in Brussels interviewing MEPs. He is expected to submit his conclusions over the next few days.

The European parliament is under pressure to improve the system. Documents detailing staffing allowance payments in 2002 reveal poor organisation, with money being paid into “random” bank accounts.

According to the files, the wife of David Sumberg, a Tory MEP, was paid £7,922 in one month, implying a salary of £95,000 a year. Sumberg said this figure was “completely inaccurate” and the annual allowance had been paid to independent accountants, who then paid Carolyn Sumberg and other staff. This was confirmed by the accountants.

The Liberal Democrats complain some of the expenses were paid into the wrong accounts. At one stage the expenses of Nick Clegg, then an MEP but now the party leader, were paid into the account of Sarah Ludford MEP. A party accountant said it took two years to sort out the mistakes.

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