Auditors were investigating the role of Christopher Adams, a man who was hired by Mr Farage to work as his assistant in the European Parliament.
Auditors investigated the role of Christopher Adams, hired by Mr Farage as an assistant, who was suspended past year over suspicions that his professional activities were not related to the European parliament.
The investigation found that Christopher Adams, besides being Farage's personal parliamentary assistant, was also carrying out work for the Euroskeptic party as its national nominating officer.
"Since 1 January  the European parliament has withheld 50 percent in order to recoup the €40,000 (US$48,692) due in salary that was paid to Christopher Adams and which can not be proved by Farage", a parliamentary source told the Guardian. "Tony Blair and Nigel Farage aren't two people I'd normally like to be put in a group with, but on this issue they are speaking sense".
Farage's pension from the European Union should be worth about €80,000 per year with a transitional allowance worth more than €100,000 when he steps down as an MEP in 2019 as the United Kingdom leaves the EU.
Mr Helmer denied any wrongdoing but gave no explanation as to why he was stepping down.
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But, if MEPs fail to "provide any justification or proof" that their funded assistants are only carrying out EU-related duties, "then the administration may recover the money by withholding part of the MEP's salary".
Farage, who has been an MEP for 18 years, has one of the worst attendance records at the parliament in Brussels and Strasbourg.
Former UKIP leader Nigel Farage in Lincoln on May 4, 2016.
Farage told the journalist Michael Crick last September that he had not been paid his MEP salary for several months because of the dispute over Ukip spending, but the parliament source said that was not true.