Tory MP was partner in Harwood Film Partnership, which has deferred tax. His involvement was not disclosed to parliament

The transport minister Stephen Hammond is facing a formal parliamentary inquiry after the Guardian disclosed he had failed to declare his directorship with a company that receives tax breaks.

The MP for Wimbledon has been a partner in Harwood Film Partnership, which has deferred tax for its members. His involvement had not been disclosed in the MPs' register of members' interests.

Hammond was at the forefront of Tory attacks on Ken Livingstone, Labour's candidate for London mayor, for using a tax loophole to pay 20% tax on his outside earnings.

The Tory MP became an investor in Harwood in 2005, the same year the partnership was established. He said he was introduced to the partnership by David Rangeley, a financial adviser who uses the email address "rdrtaxwizard".

Simon Danczuk, Labour MP for Rochdale, wrote to John Lyon, the parliamentary commissioner for standards, in October asking him to investigate whether Hammond had broken the rules. A spokeswoman for Lyon said a formal inquiry into Hammond had now been launched.

The code of conduct for MPs says: "It is a cardinal principle that members are responsible for making a full disclosure of their own interests in the register; and if they have relevant interests which do not fall clearly into one or other of the specified categories [directorships, paid employment, clients, sponsorships, property, shareholdings], they will nonetheless be expected to register them".

In an email to the Guardian in October, Hammond wrote that there had been a deferral of tax but he believed it complied with tax laws. "As the scheme was a sale and leaseback, by its very nature there was a deferral of tax but there was always a tax liability which I now declare and pay every year," he said.

Hammond said he had no idea that he was listed as an "associated director" to the company until he was contacted by the Guardian and that this was an incorrect. "A partnership has no directors," he said. He said he believed he was not required to record his partnership in the register of members' interests because he was an investor and not a director. "As HMRC have never raised a query with me I have always assumed the advice that the scheme was entirely legal and HMRC compliant to be correct." he said.

Approached on Thursday, Hammond wrote in an email that he was helping Lyon with his inquiries and had been cleared of one complaint already. He said he had supplied a letter to the commissioner which showed his holdings were below declarable limits.

In an email, Rangeley wrote on Thursday that the scheme invested in two films: Retrograde, a 2004 sci-fi movie starring Dolph Lungren, and Renaissance, which may refer to a French black and white animation film starring Daniel Craig.

"The sale and leaseback structure was well known to, and acceptable to, HM Revenue and Customs who devoted a good number of pages in their Inspectors' Business Income Manual to dealing with them. HMRC enquired into the partnership tax return (as they always do) and the enquiry has been settled," said Rangeley.