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The Dartford Labour Party has handed back a Covid support grant worth thousands of pounds after an automatic council payment.
A transaction saw the local branch receive a £10,000 cash windfall which was intended for struggling businesses.
Last year, Chancellor Rishi Sunak set up a series of support schemes in response to the economic fallout of the pandemic.
Councils were tasked with dishing out the cash, which included a one-off grant worth up to £10,000 for small businesses, to help owners manage their operating costs.
It has since emerged that some branches of local political parties exploited a "legal loophole" to claim the cash while others, most notably the self-employed, were largely frozen out.
In a Huffington Post investigation, the Dartford Labour Party was named as one of seven local Labour branches to have received the payment.
It prompted Dartford's Tory MP Gareth Johnson and the Dartford Conservative Association to call for the group to account for the money, or hand it back.
Mr Johnson said: "This grant was clearly intended to help those independent businesses at the heart of a local economy and to safeguard the millions of jobs that small businesses provide.
"To take £10,000 from the fund just because you can does not mean that you should, and I’m afraid it shows that Dartford Labour are either completely oblivious to the impact of this pandemic on real small businesses or entirely cynical.
"They should explain why they took the money or give it back.”
But Sacha Gosine, leader of the local Labour Group, said the cash was received "in error" due to an automatic administrative council process and had already been returned.
"The council thought we were eligible for it," he said. "They did an eligibility criteria and thought we were deemed it but it was not something that we would spend.
"It was received in error and has been handed back. None of it has been spent."
Dartford council has since confirmed the grants were applied automatically.
No political party has been found yet to have successfully claimed in Scotland or Wales, where devolved governments issued stricter guidance to town halls.
However, in England 15 Tory party associations claimed £150,000 in total, while seven constituency Labour parties amassed £70,000.
Last year, the Ashford Conservative Association successfully applied for the scheme which it was eligible to apply for because it has an office on which they pay business rates.
