The High Court has ruled that the Electoral Commission issued incorrect advice to Vote Leave campaigners during the referendum, in a massive blow to those pushing to discredit the Brexit vote.

Their blunder led to Vote Leave and other Leave campaigners becoming embroiled in an expensive legal battle spanning the past two years, fueling claims the pro-Brexit side cheated.

Vote Leave paid £625,000 to the pro-Brexit campaigner Darren Grimes and his BeLeave group during the campaign, with the watchdog initially saying it had no grounds to suspect this was a ploy to evade spending limits.

As the anti-Brexit backlash grew, the Electoral Commission changed its mind and fined Vote Leave and Mr Grimes, as well as referring the young campaigner to the police.

The Commission “has misinterpreted the definition of ‘referendum expenses’”, the High Court ruling said Friday, adding:

“The source of its error is a mistaken assumption that an individual or body which makes a donation to a permitted participant cannot thereby incur referendum expenses.”

Mr Grimes and Vote Leave have consistently denied wrongdoing and insisted they had been acting on advice given by the watchdog during the campaign.

Mr Grimes commented on social media Friday: “The supposed guardians of our democracy got it wrong and as a consequence have completely ruined my early twenties – surely this witch hunt against Leave campaigners has to end now?”

He added: “If the body in charge of regulating elections and referendums gives advice that donations to other campaigns are permissible, donations are made, and then the regulator decides they weren’t permissible in the first place – who is to blame? Utter sh*t show.”

Former Vote Leave Chief Executive Matthew Elliott described it as an “Alice in Wonderland” situation:

“We find ourselves in a complete Alice in Wonderland situation. Vote Leave asked for, and received, the Electoral Commission’s advice. We followed that advice.

“During the judicial review, the Electoral Commission tried to avoid admitting that it had given that advice to us, but we were able to establish that they had – and the judges clearly ruled in the Preliminary Hearing that we had received that advice.

“Yet we are now told that, by having followed that advice, we broke the law.”