UKIP MEP and General Election candidate Janice Atkinson has been suspended "following allegations of a serious financial nature".
The Sun newspaper claims it filmed a member of Ms Atkinson's staff "apparently plotting to make a substantial bogus expenses claim" in relation to a UKIP party in Margate.
Ms Atkinson was due to stand in the Folkestone and Hythe seat - one of UKIP's top election targets.
The 52-year-old is one of 10 MEPs for southeast England and her Twitter biography says she is author of the party's welfare policies.
UKIP leader Nigel Farage told KentOnline he was not pre-judging the case but it concerned "quite a serious allegation that a receipt that was submitted was not all it should have been".
"We treat these things very seriously so we have acted quickly - some may say harshly - so we will have to wait and see," Mr Farage said.
"It's as much about how you deal with it and we have shown we deal with this kind of thing very quickly."
A party spokesman said it was "incredibly disappointed" and that Ms Atkinson appeared to have exercised "extremely poor judgment".
Ms Atkinson caused controversy last year after being caught on camera referring to a Thai constituent as a "ting tong from somewhere".
The 52-year-old - elected to the European Parliament last year - said she was "incredibly sorry" and had not intended any malice.
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