Foreign Secretary David Lammy and a taxi driver are locked in a bitter dispute over a €700 (£588) fare for a journey from Italy to France.
The driver claims Lammy and his wife refused to pay after being driven from Forli, near Bologna in northeast Italy, to a French ski resort.
The Foreign Secretary "totally refutes" the cabbie's allegations, his department said - with both parties now filing legal complaints against each other.
The driver said he collected Lammy, 52, and his artist wife Nicola Green, 53, on April 10 from Forli after they had accompanied King Charles and Queen Camilla on a state visit to Italy.
The driver said he collected Lammy, 52, and his artist wife Nicola Green, 53, on April 10
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He alleges he drove them more than 360 miles over six hours to reach Flaine, a ski village in the French Alps.
The fare totalled €1,550 (£1,305), with €700 to be paid by the passengers.
According to the driver, when the couple refused to pay, he left them at their destination and drove to the local police station to file a complaint.
At the station, officers reportedly discovered two diplomatic passports, two number plates and a coded briefcase in the taxi's boot.
These items led police to identify Lammy - sparking a investigation by the local prosecutor's office in Bonneville.
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Lammy had been accompanying King Charles on his state visit to Italy
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The driver, who remains anonymous, told La Provence newspaper: "On the night of April 10-11, I was the victim of assault and violence by members of a British embassy during an international transfer, where they refused to pay me."
He claimed Lammy "became aggressive" when asked for payment and "snatched the receipt from his hand".
The driver added that had he known who Lammy was, he would have charged "much more".
Bonneville prosecutor Boris Duffau said: "The stories are not identical. Of course, the passengers are not saying the same thing as the driver when he filed a complaint."
"The passengers have assured that the driver had already been paid. The driver said no."
While the Bonneville prosecutor's office investigates the matter, the driver will face court on November 3 on charges of "fraudulently removing luggage and cash".
Lammy had taken a pricey taxi ride from Forli, Italy to Flaine, France
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This stems from him driving off with Lammy's belongings still in the boot.
The cabbie is said to have sent a notice to the British Embassy explaining the situation and requesting the fare be settled amicably.
A Foreign Office spokesman said: "We totally refute these allegations. The fare was paid in full. The Foreign Secretary and his wife are named as victims in this matter and the driver has been charged with theft.
"As there is an ongoing legal process, it would be inappropriate to comment further."
