Human rights lawyers smeared British soldiers with false accusations of the torture and murder or innocent Iraqis , a government dossier claims . A report drawn up on the Prime Minister 's orders claims Public Interest Lawyers ( PIL ) pursued claims against soldiers despite realising the allegations of abuse might have been 'untrue ' . It comes after a public inquiry spent £31million exonerating British soldiers of claims they went they went on a killing and torture spree following a fierce battle in southern Iraq in 2004 . Scroll down for video . 'False claims ' : The government may take legal action against Public Interest Lawyers and its chief lawyer , Phil Shiner , left , over allegations the firm smeared British soldiers with false allegations of torture and murder . Right is a picture of the aftermath of the Battle of Danny Boy shown to the five-year Al-Sweady inquiry . After five years of investigations , the Al-Sweady inquiry in December concluded there were some breaches of the Geneva convention following the battle . But it also ruled allegations of murder and torture were based on 'deliberate lies , reckless speculation and ingrained hostility ' . Now the government is gearing up to sue law firms for millions of pounds in legal costs and calling for the PIL 's chief lawyer , Phil Shiner , to be struck off . The MoD 's dossier , seen by at least two Sunday newspapers , accuses PIL and another law firm , Leigh Day , of continuing to pursue the case even after evidence emerged that the allegations may be untrue . It suggests PIL had doubts about the credibility of its clients ' evidence as early as March 2013 but failed to withdraw the allegations for another 12 months , Tim Ross of the Sunday Telegraph reported . That led investigators to take evidence from around 100 further witnesses , costing taxpayers an extra £780,000 , the paper reported the Government 's dossier as saying . It is also alleged that PIL used a local 'agent ' to trawl Basra for potential victims , a breach of a ban on solicitors touting for business that brought hundreds of extra claims against the Army . The Birmingham-based law firm even continued to represent one claimant in a separate judicial review after he admitted to Al-Sweady investigators he had lied about his sister dying on the battlefield , the dossier alleges . Leigh Day are accused of failing to disclose a key document for six years , according to the Sun on Sunday . Thorough investigation : British soldiers with an Iraqi detainee following the Battle of Danny Boy in May 2004 . Claims troops rounded up civilians for a killing and torture spree following the battle were dismissed . The claims came after the Battle of Danny Boy on May 14 2004 , a fierce firefight which erupted when insurgents from the Mahdi Army ambushed a patrol of Argyll and Sutherland Highlanders . Their reinforcements , the 1st Battalion of the Princess of Wales 's Royal Regiment , were also ambushed and after three hours of fighting 28 Iraqi fighters had been killed . Claims which subsequently emerged that enraged British soldiers had tortured and executed innocent local people in the aftermath of the battle were dismissed by the Al-Sweady inquiry , which was named for an alleged teenage victim . Former 1st Battalion the Princess of Wales ' Royal Regiment corporal Brian Wood has previously told the Daily Mail he felt he and his colleagues who fought in thad 'done the right thing ' . Mr Wood , 34 , who was awarded the Military Cross for his role in the battle , according to the paper , said : 'We have been dragged through five years of hell . That in my view is a betrayal of our service . 'We did what we had to do as soldiers and we did the right thing . ' Ann Hoolin , 50 , the mother of soldier Scott Hoolin , told the paper her son was 'upset and disturbed ' following the inquiry . 'To be accused of wrongdoing in the aftermath of what happened is disgraceful , ' she said . Battlegroud : The Danny Boy checkpoint , near where insurgents from the Mahdi Army ambushed a patrol of Argyll and Sutherland Highlanders , then their reinforcements , leading to a fierce firefight . Sir Thayne Forbes , the retired judge who led the Al-Sweady inquiry , did find that there had been instances of ill-treatment during 'tactical questioning ' of the detainees at Camp Abu Naji , near Majar-al-Kabir in southern Iraq , on the night of May 14/15 . These included depriving the prisoners of sight , food and sleep , and using threatening interrogation techniques contrary to the Geneva Convention . It amounted to ill-treatment and fell below the high standard to be expected of the British Army , Sir Thayne said . After Sir Thayne 's report , Public Interest Lawyers insisted the inquiry had been 'legally necessary , morally justified and politically required ' . Responding to a request for comment on the allegations against PIL and Leigh Day , an MoD spokesman told MailOnline : 'The MoD is assisting the Solicitors Regulation Authority , which is investigating issues that came to light as a result of the Al-Sweady Inquiry . ' PIL said last night in a statement seen by the Sunday Telegraph : 'The Al-Sweady inquiry thoroughly investigated the subject of these matters during which no criticisms were made of Public Interest Lawyers or Phil Shiner by the chair . ' 'It is not appropriate to comment any further while SRA proceedings are ongoing . 'PIL and Mr Shiner are confident that they have acted in accordance with their professional obligations . '
Al-Sweady inquiry spent £31million probing the claims against soldiers . The report found that there was a “culture of impunity” in which senior officers were allowed to carry on abusing their positions and even get away with murder. Dossier alleges they used local 'agent ' to trawl Basra for new claimants . As a result the inquiry was prolonged for an extra year , the MoD claims . Government lawyers may sue law firms for millions in legal costs .