The sister of the Conservative MP Jacob Rees-Mogg has been unveiled as a candidate for Nigel Farage’s new Brexit party in the European elections, as the former Ukip leader said he intended to put “the fear of God” into MPs.

Annunziata Rees-Mogg, who has twice failed to get elected as a Tory MP, was introduced by Farage at the party’s campaign launch at a factory in Coventry on Friday.

Addressing cheering supporters, the 40-year-old former Telegraph journalist said: “I joined the Conservative party in 1984 and this is not a decision I have made lightly – to leave a party for which I have fought at every election since 1987, from Maggie Thatcher through to Theresa May. I know which one I’d rather have representing us now.”

Rees-Mogg said Farage’s party must “rescue our democracy” and show that “the politicians are not our masters – they are to do our bidding”.

Rees-Mogg said she would be “stunned [and] unbelievably surprised” if her brother, who chairs the hard-Brexit European Research Group faction of Tory MPs, followed her out of the party. “He sees one way of achieving Brexit and a return to democracy, and I see a different one,” she said.

Play Video 2:10 'No more Mr Nice Guy': Nigel Farage launches Brexit party - video

Richard Tice, a multimillionaire property tycoon and founder of campaign group Leave Means Leave, was unveiled as the chair of the new party, which claims to have 40 “high-quality” candidates for the European elections on 23 May.

Tice was a co-chair of Leave.EU, which was fined £60,000 by the Electoral Commission in February for campaign violations in conjunction with Arron Banks’s firm Eldon Insurance.

Farage said earlier on Friday the party would not take any donations from Banks, who he said had been “very badly burned” since the referendum, referring to questions over the source of the £8m that Banks donated to the pro-Brexit campaign.

In a speech to more than 100 supporters gathered in a chilly metalworks plant in Coventry, Farage claimed his party had received more than £750,000 in small donations in 10 days. He said it would accept big donations but would be “thrilled” if the party could be bankrolled by ordinary voters.

Farage promised to unveil “the most impressive list of candidates any political party has put before the electorate”, before introducing Rees-Mogg.

Other candidates announced on Friday were Ben Habib, a businessman and former Tory donor, the pro-Brexit campaigner June Mummery, and former teacher Dr Alka Sehgal Cuthbert.

“I do believe that we can win these European elections and that we can again start to put the fear of God into our members of parliament in Westminster,” he said. “They deserve nothing less than that after the way they’ve treated us over this betrayal. Our task and our mission is to change politics for good.

Ignore firebrand backbenchers such as Jacob Rees-Mogg, May tells EU Read more

“I said that if I ever did come back into the political fray, next time it would be no more Mr Nice Guy, and I mean it. I am angry about what has happened. I said many years ago I wanted to cause an earthquake in British politics. Now what I am fighting for, and with your support what we will attempt to achieve, is a democratic revolution in British politics.”

Speaking earlier on BBC Radio 4’s Today programme, Farage described the departure of two founding officials over Islamophobic or racist tweets as “teething problems” and said the party would be “deeply intolerant of all forms of intolerance”.

It emerged later that one of the candidates announced, Mummery, has re-tweeted a message from a far-right account on Twitter. Her timeline showed that last week Mummery forwarded a message about the EU from an account called Active Patriot UK, the profile picture for which shows someone in a paramilitary-style balaclava in front of an English flag.

The account strongly backs the anti-Islam activist Tommy Robinson. Among other tweets from the account is a video of Paul Golding, leader of the banned far-right group Britain First, and a misogynistic joke about a female newspaper reporter.

The Brexit party was contacted for comment.

Farage said he had put £1,000 on his party to finish top of the polls in the European elections at a price of 3/1 and that, “with a bit of luck, a following wind, trying our hardest”, the campaign could force Britain’s exit from the EU without a deal.

“The quickest way to a free-trade deal is we leave on WTO rules and, you know something, the European Union will come running down the street after us wanting a tariff-free deal,” he said to loud cheers.

Farage denied his party and Ukip would split the pro-Brexit vote, arguing that “middle England, decent people” would not vote for his former party, which he said had become “completely obsessed” by Islam and had a “fairly loutish fringe” and was now a party associated “with violence, criminal records and thuggery”.

Gerard Batten, the Ukip leader, hit back at Farage on Twitter, calling him a “self-serving hypocrite” whose party was not a real political force.