A prominent rightwing thinktank has been accused of “misconduct and mismanagement” and issued with a formal legal warning by the Charity Commission after using its resources to campaign for a hard Brexit.

The Institute of Economic Affairs (IEA) received the formal warning from the watchdog after publishing and campaigning for its Plan A+ hard Brexit proposal document. As a charity the IEA is banned from campaigning on political issues unrelated to its stated purpose of furthering education.

The commission, which regulates the charitable sector, said the publication was a clear attempt to campaign to influence government policy. The IEA launched Plan A+ at an event last September with endorsements from prominent pro-Brexit Conservative MPs, including the former Brexit secretary David Davis and Jacob Rees-Mogg.

The official warning requires the IEA to implement a procedure for its reports to be signed off by trustees before publication in future and undertake in writing not to carry out political campaigning again. It removed Plan A+ from its website last year after it was told to by the commission.

In its warning, the commission said: “The launch event provided a platform for parliamentarians, known to publicly and vocally support a particular outcome from the UK’s exit from the European Union, to launch an alternative plan to the current one being pursued by government.

“This clearly constitutes political activity and, as it does not further the educational purposes of the IEA, any costs incurred by the IEA will have been an inappropriate use of charitable resources.”

The commission added that all the politicians at the launch were “people known publicly to support a particular approach or outcome to Brexit and three of the four were from the same political party. By inviting only those who held a particular set of views, IEA risked the public perception that the IEA is politically biased and has a political viewpoint opposed to the government’s current Brexit policy.”

Facebook Twitter Pinterest Panel members including former Labour MP Gisela Stuart, former Brexit secretary David Davis MP, Jacob Rees-Mogg MP and former secretary of sate for Northern Ireland Theresa Villiers MP discuss Plan A+ in September. Photograph: Jack Taylor/Getty Images

It said that by holding the launch of the report in the public spotlight, the IEA was “engaging in campaigning and lobbying activity that is not sufficiently connected to its educational purposes”.

The IEA remains subject to an ongoing compliance case by the regulator, launched last year after Greenpeace’s investigative unit, Unearthed, filmed the IEA chief executive, Mark Littlewood, appearing to offer an undercover reporter access to ministers in exchange for donations.

At the time, the IEA denied all wrongdoing, saying it was “spurious to suggest that the IEA is engaging in any kind of ‘cash for access’ system”.

Announcing the formal warning, David Holdsworth, deputy CEO and registrar at the Charity Commission, said: “Charitable thinktanks are charities and need to behave as such, including by complying at all times with charity law. Like all charities, they share a responsibility for protecting the reputation of charity as whole.

“While the law recognises the role charitable thinktanks can play in promoting understanding and learning and inspiring debate, it also sets important limits, designed to protect what is unique and precious about charity.

“Most charitable thinktanks understand the rules that are associated with charitable status, and are careful to ensure their work complies with our guidance and inspires public trust.

“I hope that our official warning now encourages the trustees of the IEA to recognise and understand that they must run the organisation as a charity, and comply with charity law.”

However, in a statement the chairman of the IEA’s board of trustees criticised the commission and accused it of making the legal rules governing charity unclear.

“The Institute of Economic Affairs is disappointed that the Charity Commission has issued us with an official warning for the publication and launch of a trade paper in September 2018,” said Neil Record.

“The IEA is considering a range of options, as we believe this warning has extremely widespread and worrying implications for the whole of the thinktank and educational charity sector. A precedent is being set: research papers – and their launches – which put forward policy proposals may now fall outside the parameters of what the charity commission considers acceptable activity.”

• This article was amended on 6 February 2019 to more accurately state the Charity Commission’s position that as a charity the IEA is banned from campaigning on political issues unrelated to its stated purpose of furthering education.

• On 28 June 2019, the Charity Commission issued the following statement: “We can confirm that the official warning against IEA has been withdrawn with immediate effect. A report published by the charity in September 2018 crossed the line and represented a breach of charity law. In light of steps the charity has taken since the breach was brought to its attention, we have now withdrawn that warning. The charity has made commitments to cooperate with us, and we welcome that.”