Duncan Bannatyne has taken issue with Pakistan-born James Caan's non-domiciled resident tax status and has stated that he will not invest with any Dragon that does the show using offshore companies.
The Scot - who has an estimated fortune of £300m - has a company search report that reveals that HB Advisors Limited, Hamilton Bradshaw's sole shareholder, is registered in the Cayman Islands.
"I have already decided it would be difficult to invest with James as Hamilton Bradshaw is owned by a Cayman Island company," said Bannatyne.
I have already decided it would be difficult to invest with James as Hamilton Bradshaw is owned by a Cayman Island company
"I am not going to invest alongside anyone on Dragons' Den if the money is coming from an offshore company either directly or indirectly. I am not feeding the coffers of the Cayman Islands or British Virgin Islands."
Non-doms can live in the UK but have affiliations with another country where they were either born or their parents were born.
They do not pay UK income tax or capital gains on income earned or capital generated overseas, although tax does fall due if any money is brought into the UK.
The Government changed the rules on non doms in April 2008, requiring the estimated 65,000 residents here to pay a £30,000 charge if they wanted to continue to keep their overseas assets out of the UK tax net. Some 4,000 paid the charge in the first year, HMRC figures show.
The BBC have said that they are unconcerned with the row and that the show did not rely on the panellists getting on.
"Dragons' Den is not a team effort. It is all about entrepreneurs pitching to individual Dragons in the hope of winning backing for their ideas, and five hard-headed investors looking for the best deal," said a spokesperson for the BBC.
Caan has declined to comment on the bust-up but has previously confirmed his non-dom status and said that : "Hamilton Bradshaw is a UK- registered company, paying UK tax on all its income."
