The Conservative Party's Central Office has taken control of the North Somerset Conservative Association after a row that has divided local members.
It concerns the money spent on an election battlebus used in the Defence Secretary Liam Fox's campaign.
His election agent, Councillor Carl Francis-Pester, has been suspended as the association's president.
The councillor denies an accusation of showing "a reckless and cavalier attitude to the party's finances".
Councillor Francis-Pester admits spending £5,000 on a 15-seater minibus for Mr Fox's election campaign.
He sold it months later for £1,500, but the cheque he claims to have sent was never seen by the association.
Councillor Francis-Pester, who has also stepped down as the executive member for the environment on North Somerset Council, has checked his balance and admits the money never left his account.
He defended not sending another cheque for the minibus funds to the association.
"At the end of last year we were told to make no effort to regularize matters," he said.
"Clearly if there is now a need to do that then we can do that... but unless we have the full parameters of the details of these complaints then it is very difficult to know that simply the production of another cheque will be the conclusion of the matter."
The councillor also denies failing to pay rent on an office within the association's headquarters in Nailsea.
The association's chairman, Christopher Allcock, has also been accused of having a "reckless and cavalier attitude to the party's finances" by the interim association chairman David Dodd. He denies this.
Lord Gold, the chairman of the Conservative Party's disciplinary committee, must now decide what action, if any, to take against the two men.
Both sides will be asked to present their side of the story to him in an "informal meeting" in London.
North Somerset Conservatives will then be handed back control of their own association on 25 March.
Dr Fox said: "I'm not going to comment as this is subject to an internal investigation by the Conservative Party.
"My interest is in ensuring the Conservative Party in North Somerset is strong and united, and has strong candidates for the elections. I want to see the council kept."
Council leader Nigel Ashton has been unavailable for comment on the issue for the last two weeks.
Somerset Conservatives area chairman Peter Wright said he was "deeply saddened by the whole business".
A Conservative Party Spokesman said later on Friday that the North Somerset Conservative Association was working through the issues.
He said an interim chairman would be appointed on Friday.