A London Islamic centre run by the UK representative of Ayatollah Ali Khamenei, Iranian supreme leader, benefited from more than £100,000 of the British government's Covid-19 furlough scheme.
In its annual accounts filed last month, the Islamic Centre of England revealed Britain gave the group £109,476 ($149,000) last year under its Coronavirus Job Retention Scheme.
The charity, whose 2021 accounts show it has more than £4.2 million in reserve, runs a mosque and cultural office in west London.
The centre, which serves as the UK office for Mr Khamenei, would have been forced to suspend worship and many other activities during the Covid-19 lockdowns in 2020 and earlier this year.
Last year it was given an official warning by the charity regulator after a speaker appeared to break terrorism laws by praising Qassem Suleimani as a great martyr after he was killed by a US drone strike.
The Islamic Centre of England held a candlelit vigil on January 3, 2020, to mourn the death of the commander of the Quds Force in the air strike in Baghdad.
A speaker at the event was filmed praising Gen Suleimani, who had been subject to UK sanctions for terrorism and terrorist-financing since 2011.
The UK’s terrorism laws make it an offence to encourage and glorify terrorism and it carries a penalty of up to 15 years in jail.
The charity has been told to review all statements about Gen Suleimani on its website to ensure they are lawful.
“Any charity being associated with terrorism is completely unacceptable and we are concerned by the corrosive effect this might have on public confidence in this and other charities,” Tim Hopkins, a senior investigator at the Charity Commission, said last year.
“Charities exist to improve lives and strengthen society, so it is vital that trustees honour their responsibility to act in the best interests of their charity at all times.
“We expect the charity’s trustees to comply with the required actions to address our concerns.”
The UK has been pursuing Iran to release the British-Iranian Nazanin Zaghari-Ratcliffe, who was arrested in Tehran in April 2016 as she prepared to fly back to London after visiting her parents with her young daughter.
She was sentenced to jail for plotting against the regime, charges that the family and the British government dismiss as fabricated.
She was released into house arrest in March 2020 but is barred from leaving the country. She was sentenced to a further year behind bars in April and remains with her parents in Tehran.
The family of Ms Zaghari-Ratcliffe and another jailed British dual citizen, Anoosheh Ashoori, have linked their cases to a decades-old unpaid UK debt of about £400 million after an aborted arms deal before the 1979 revolution.
The dispute is continuing through the courts and the UK says repayment is complicated by sanctions imposed on Iran.