John Swinney has been warned not to ‘boycott’ a parliamentary inquiry into the Peter Murrell scandal if Westminster takes charge.

Scottish Labour will use a Holyrood vote next week to demand an inquiry into how the former SNP chief executive managed to embezzle £400,310 over 12 years.

The First Minister has admitted financial controls were inadequate and that VAT may have been reclaimed from fake invoices, but refuses to back an outside investigation.

SNP and Green MSPs are expected to block a probe after Tuesday’s debate.

But on the same day, the Commons Scottish Affairs Committee, most of whose members support an inquiry, is expected to consider holding its own.

Only Dave Doogan, the sole SNP member, opposes the idea.

The Daily Record reported an SNP source saying the party could boycott a Westminster probe, as it would be ‘unpopular’ with its supporters.

The insider said the SNP was accountable to Holyrood and Westminster lacked ‘credibility’.

A witness who refuses to appear before a Commons committee can be formally summoned. A source close to Mr Swinney told the Mail the SNP did not expect a Westminster probe.

As all parties have embarrassments they would rather forget, it would open a ‘Pandora’s Box’, with parties endlessly investigating each other, the source said.

But asked if the SNP would boycott a Westminster probe, the source was non-committal. ‘We’ll cross the bridge when we come to it,’ they said.

The possibility of senior Nationalists ‘running away’ from scrutiny provoked an outcry.

Scottish Conservative MP Harriet Cross said: ‘John Swinney has made it clear he has no intention of letting Holyrood hold an inquiry, which is why we have called for one to take place at Westminster. If the SNP were to boycott it, it would do nothing for their credibility or the perception of their willingness to get to the bottom of this story.’

Despite the wider issues of governance and the potential abuse of public money, Mr Swinney insists the police investigation into Murrell was sufficient.

Scottish Labour deputy leader Jackie Baillie said: ‘The more that John Swinney and his SNP allies continue to dig in, the more suspicious the public will become.’ And Reform UK MSP Thomas Kerr said: ‘The SNP cannot claim to stand for transparency while dodging accountability whenever it suits.’

Labour MP Graeme Downie added: ‘John Swinney has lost all credibility by running away from any scrutiny of this SNP financial scandal.’ 

Scottish Liberal Democrat MP Susan Murray said: ‘If SNP figures were to boycott a parliamentary inquiry, I think they would look utterly self-serving in the eyes of the public.’

The SNP was asked to comment.