Labour has dropped its newly selected parliamentary candidate for the key target seat of Welwyn Hatfield after The Sunday Times learnt her companies owe unpaid tax.

Tara-Mary Lyons had run up large debts in two businesses, then dissolved them without paying. As well as owing an alleged £480,000 to HM Revenue & Customs, the companies owe hundreds of thousands of pounds to suppliers and former staff. A serving Labour councillor, Lyons has five outstanding county court judgments against her personally, totalling nearly £21,000.

The case will raise further questions about Labour’s vetting procedures. Mandy Richards, the party’s candidate in another key seat, Worcester, was sacked two weeks ago after this newspaper revealed she was a fantasist subject to 14 High Court restraining orders.

Lyons was