UKIP faces bankruptcy within weeks after it emerged the party could be liable to pay up to £650,000 in legal costs in a court case involving one of its MEPs.

This amount is nearly double the amount in Ukip’s coffers, according to its latest annual accounts.

2 Yorkshire and Humber MEP Jane Collins was found to have defamed three Labour MPs Credit: PA:Press Association

The party agreed to pay the legal expenses for its Yorkshire and Humber MEP Jane Collins, who was found to have defamed three Labour MPs after accusing them of knowing about the child abuse scandal in Rotherham but doing nothing about it.

Sir Kevin Barron, John Healey and Sarah Champion sued Jane Collins over her comments at Ukip's party conference in September 2014 - and last year won £54,000 in damages each.

But she now faces having to pay for the full legal costs of the three MPs.

Ukip agreed to pay for her costs - which could run up to a staggering £650,000.

2 Ukip agreed to pay for her Collins' legal costs - which could run up to a staggering £650,000 Credit: PA:Press Association

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Party insiders disagree over how much Ukip is liable for but the final amount will be decided by a court hearing next week.

But Ukip’s annual accounts for 2016 - the latest documents available - reveal they only had £365,429 in their bank account.

“This could lead to Ukip’s bankruptcy,” party insiders said.