The pair appeared on the BBC’s Sunday Politics North West programme to talk about a range of issues, including the Isle of Man’s tax status.
Mr Matheson alleged Prime Minister David Cameron, who is still facing questions over his own dealings with HMRC, was not doing enough to tackle the problem.
The Labour MP for Chester said: “These offshore tax havens are there for a reason and quite frankly they only benefit the very richest in our society and are detrimental to the rest of the country.
“I think the new regulations in the Isle of Man don’t go far enough and we know why it doesn’t go far enough, because David Cameron is now involved himself in this.”
Ms Sandbach, Eddisbury’s Conservative MP, stepped in to defend her party’s leader.
She said: “It’s quite clear that you’ve made allegations of tax evasion and it’s been very public.
“It’s been publicly accepted by everybody that there’s nothing illegal in what happened and I think you need to set the record straight.”
Mr Matheson said: “Antoinette’s absolutely right. There’s nothing illegal here, but the rules on tax avoidance allow too much latitude.”
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