Michelle Mone has told critics "you won't break me," as she finds herself embroiled in a tax avoidance row.

Britain's new business start-up czar avoided tax using a scheme of the kind branded "morally repugnant" by Chancellor George Osborne.

The lingerie entrepreneur used employee benefit trusts or EBTs - the loophole that landed Rangers FC in court - before her high-profile but small bra firm suffered substantial losses.

Her company MJM International paid more than £500,000 in to EBTs when it was in profit, according to accounts filed at Companies House.

Ms Mone and her then husband and business partner Michael Mone were trustees of those EBTs, the accounts said.

The tax revelation came amid a backlash against Ms Mone's appointment from business leaders.

The Glaswegian was hand-picked by UK ministers to lead a review of how to boost the number of new companies created in poor areas.

But multi-millionaire Douglas Anderson of GAP Group cast doubts on her suitability for this role. He said: "There is no way she is qualified to advise anybody on setting up a profitable business, because, quite simply, she hasn’t."

Mr Anderson, whose business employs 1,300 people, has also written to Prime Minister David Cameron warning him against a much-predicted move to give Ms Mone a peerage.

The businesswoman, he said, would be "divisive" and drive Scottish entrepreneurs in to the Yes camp.

Senior Scottish Conservatives, who were not consulted over the appointment, have expressed private concern.

Ms Mone's use of EBTs runs contrary to Tory efforts to crack down on tax avoidance.

HMRC earlier this year warned that it would be issuing "accelerated payment notices" to those involved in EBT arrangements.

Tax officials have been in a long-term dispute with Rangers FC over payments made to its players through EBTs.

MJM International suffered retained losses of £780,000 in its last year - 2013 - before passing its assets to a new parent company, Ultimo Brands, which also made a loss, and ceasing to trade.

Ms Mone's wealth has previously been reported as at least £20 million.

And news reports from 2013 suggested that the 43-year-old had bought out her husband with £24m.

However, abbreviated accounts for Ultimo Brands, the newly created parent of MJM, showed shareholder funds of little more than £3m at the end of 2013.

This was after a controlling stake in the business was taken by Sri Lankan investors MAS Holdings.

Ms Mone in 2014 said she had sold 80 per cent of Ultimo Brands.

A friend of Mr Mone dismissed the £24m buyout story as "untrue".

Ms Mone's spokesman did not comment when asked if the £24m figure was accurate.

Ms Mone also has a diet pill firm, which lost £6,000 last year, and a new fake tan business spun off from Ultimo.

Labour figures have also expressed concerns over her appointment, especially in the light of earlier revelations from an employment tribunal that MJM bugged one of its executives.

Neil Findlay MSP said: "Appointing Michelle Mone, a person who has been involved in the bugging of her employees and has used EBTs, as Britain’s start-up czar is like appointing Donald Trump to the diplomatic corp."

Another Labour figure, former MSP and advocate Brian Fitzpatrick, is related to Mr Mone. On Facebook he reacted to news of her potential peerage by saying he hoped Ms Mone would change her name.

Ms Mone's spokesman declined to comment on EBTs.

He said: "Michelle has been appointed by the Secretary of State for Work and Pensions, with the backing of the Secretary of State for Business and the Prime Minister, to produce an important report into what more assistance can be given to start-up businesses and young entrepreneurs in deprived areas of the UK.

"The appointment has been made because of Michelle's acknowledged successful record in business.

"She has no comment to make on the inaccurate claims apparently being made to The Herald in its partisan search for non-stories."

Ms Mone has quit Scotland, blaming abuse from so-called "cybernats" after she vocally supported a No vote.

Work and Pensions Minister Ian Duncan Smith said he could think of "no-one better qualified to help young entrepreneurs from deprived backgrounds" than Ms Mone, who is not being paid for her work.

The Department of Work and Pensions (DWP) refused to say how much Ms Mone's review was expected to cost.

Officials also refused to give details of the civil service secretariat which will assist the entrepreneur in preparing her report, due next year.

They declined to say whether Ms Mone or any MPs who might be drafted onto a proposed advisory body would be entitled to expenses.

A spokeswoman said: "The DWP is resourcing the review from its existing budget. We set aside appropriate funding to conduct reviews, such as this important piece of work which Michelle is leading."