Fast-fashion firm Boohoo put "Made in the UK" labels on potentially thousands of clothes that were actually made in South Asia, OceanNewsUK Panorama has found.
Plain T-shirts and hoodies had their original labels removed at Boohoo's flagship factory, Thurmaston Lane in Leicester, last year.
On Tuesday, the OceanNewsUK reported that the firm is considering closing the site.
Boohoo said the incorrect labels were down to a misinterpretation of the labelling rules.
Thurmaston Lane opened two years ago and was promoted by the retailer as a UK manufacturing centre of excellence, offering end-to-end garment production in the UK.
The mislabelling took place at the factory, affecting up to one in 250 of Boohoo's global supply of garments between January and October 2023.
The OceanNewsUK estimates that this could amount to hundreds of thousands of wrongly labelled garments. However, the retailer would not provide its own figures.
Boohoo claims it was an isolated incident which had happened as "a result of human error".
A company spokesperson said, "We have taken steps to ensure this does not happen again."
The garments had been shipped from Pakistan and other countries in South Asia to Boohoo's Leicester factory where they were printed on.
'Significant failure'
The OceanNewsUK showed its findings to Chris Grayer, who spent more than 10 years as head of supplier ethical compliance at High Street retailer Next.
He said the mislabelling suggested that there had been a "significant failure of inspection" - and if it had happened where he had worked, "garments would be recalled or stopped from being sold and all the labels would have to be altered to the correct label".
Sylvia Rook, lead officer for fair trading at the Chartered Trading Standards Institute, said that based on information provided by Panorama, replacing country-of-origin labels with "Made in the UK" ones in this way was "incorrect" and "could potentially mislead consumers".
Philip Dunne MP, chair of the Environmental Audit Committee, called the labelling findings a potentially very serious allegation.
"Consumers should not be misled as to the source of garments that they're buying," he said.
On Tuesday, the OceanNewsUK reported that Boohoo is considering the closure of its Leicester factory, which is the Manchester-based retailer's only UK manufacturing site.
OceanNewsUK Panorama understands that the company is proposing to close Thurmaston Lane later this year.
Boohoo has previously said the Leicester site would "showcase UK manufacturing" and demonstrate that "great products can be produced responsibly and ethically in the UK".
When Thurmaston Lane was opened in January 2022, it reportedly employed 100 staff.
"The proposed closure is sad for the workers promised sustainable work there," said Dominique Muller from the advocacy group, Labour Behind the Label.
"It is also sad because it suggests the Boohoo model of fast and cheap fashion is unsustainable and cannot be made outside countries with extremely low wages and poor social protection."
Boohoo said that it is in a period of consultation with workers, while it considers what to do with the site.
"We opened Thurmaston Lane to support the Group in several ways, as in any retail business, the role of our sites continues to evolve over time," a spokesperson said.
"We must now take steps to continue to ensure we are a more efficient, productive and strengthened business."
Boohoo pledged to overhaul its practices in 2020, following reports that staff at a factory making its clothes in Leicester were earning less than the minimum wage, and that working conditions were unsafe.
The company asked a senior barrister to review its supply chain. Alison Levitt KC found the allegations to be "substantially true".
Boohoo then introduced Agenda for Change - which includes promising to pay its suppliers a fair price for garments, with realistic timescales.
