Donald Trump has been accused of signing off a controversial multi-million pound New York property deal that amounted to fraud.

The Republican presidential front-runner approved a $50million investment in a property company with which he was involved only for the deal to be re-written weeks later as a ‘loan’, according to documents published by the Daily Telegraph.

Experts say the move was designed to save the companies tens of millions of dollars in US federal taxes and, according to court papers seen by the newspapers, could be fraudulent.

Donald Trump, pictured yesterday in California, has been accused not paying tax on a 2007 property deal

Mr Trump has so far refused to publish his tax returns, a disclosure that has been routinely made by presidential contenders for decades. He has claimed that it is 'none of your business'.

However, he has boasted of how he tries to pay as little tax ‘as possible’. Documents released last week show he earned nearly $500million last year but how much tax he paid remains unclear.

The claims centre on Trump’s relationship with a property company, Bayrock Group, that was building the tycoon’s Trump SoHo, a 46-floor luxury hotel and residential building in Manhattan, as well as two other developments that would bear his name. Trump was given a 15 percent stake in the New York building.

In 2007, Bayrock signed a deal with an Icelandic investment firm, FL Group, which reportedly agreed to invest $50million in four of Bayrock’s subsidiary partnerships.

However, the deal was later ‘relabeled’ as a loan, thereby exempting Bayrock from paying tax of more than 40 percent on its ‘gain’.

Former Bayrock staff who are suing the company have reportedly claimed that the move was intended to ‘fraudulently evade some $20million in tax’ by disguising the sale of partnership interests, says the Telegraph.

The allegations surround Trump's investment in the Trump SoHo building in New York, pictured

The paper says it has obtained copies of letters signed by Trump that show he approved the move.

Alan Garten, Trump’s lawyer, claimed his client had ‘nothing to do with that transaction’ and was simply acknowledging the deal as a ‘limited partner’.

But Bob McIntyre, director of the the US-based Citizens for Tax Justice said the revelations raised serious questions about Trump's judgement. Law professor and tax expert Howard Abrams said the deal was not a loan and wouldn't 'survive' an investigation by the US Inland Revenue Service (IRS).

Bayrock has dismissed the claims made in court papers by its former finance director, Jody Kriss,that it committed fraud as ‘baseless’. It said the deal was examined by the IRS which 'concluded that it was entirely appropriate'.

Trump, pictured at the unveiling of the SoHo Tower is alleged to have altered a $50 million investment he made into the project to a loan in order to reduce the amount of tax he was due to pay on the deal

The company has already attracted controversy. Trump says he was introduced to the company, which had offices in one of his buildings, by one of its associates, Felix Sater. It has since emerged Russian-born Sater is a convicted fraudster with Mob ties who was jailed for stabbing a man in the face with a broken cocktail glass.

An analysis published yesterday by USA Today revealed Trump's businesses have been involved in at least 100 lawsuits and other disputes related to unpaid taxes and the amount of tax they owe.

A spokesman for Bayrock said: 'A story in the Telegraph about a loan transaction involving Donald Trump was misleading and inaccurate, and omitted pertinent facts that would have undercut its premise.

'The FL transaction in question was vetted and approved by outside accountants and tax counsel for both Bayrock and FL. An extensive field audit by the Internal Revenue Services of materials referenced in the Telegraph article, including loan documents and letters from Bayrocktothe Trump entities, concluded in an eight-page report dated December 20, 2013, that classification of the transaction as a loan was appropriate and lawful.

'Allegations of tax fraud made in a lawsuit that was the basis of the Telegraph story were withdrawn and the attorney who brought the complaint on behalf of former employees of Bayrockwas relieved as counsel and is now under investigation by federal prosecutors for criminal contempt.