The Tory wrongly received expenses for travelling to and from Westminster at the same time as claiming the London Area Living Payment (LALP).
The £17,066.80 - representing costs over a six-year period - has been written off by watchdog IPSA, who acknowledged errors on its part.
Mr Hollobone said: “Under instructions from the Parliamentary expenses authority itself these claims, in my case, were effectively submitted and approved under a different category, which the authority has since reclassified causing the technical write-off.
“No extra costs have been incurred than would otherwise have been the case.
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“No monies have been made by me as a result.”
The ‘debt’ was by far the largest written off by IPSA in the financial year 2016-17, with some as low as £6.55.
Conservative Charlotte Leslie - who was MP for Bristol North West until the 2017 election - ran up debts for £6,178.32 for the same error.
Mr Hollobone, renowned for being the lowest-claiming MP in the House of Commons, spoke of his anger at the situation.
He said: “I am very cross that the Parliamentary expenses authority gave me the wrong advice and it has acknowledged its error, hence the write off.
“I am also very cross that it is being made to look as if I have made a mistake and somehow defrauded the system when that is categorically not the case.
“I remain the MP who out of all 650 MPs consistently claims the lowest expenses of anyone.”
An IPSA spokesman admitted to the Northants Telegraph that it could have been more pro-active in uncovering the error.
In a statement, IPSA said: “We discovered that IPSA had not been proactive in making sure MPs were aware of the restrictions relating to LALP and that there was no effective control within IPSA’s online system to confirm that for these MPs the claimed journeys were exclusively from the constituency office.
“This affected a small number of MPs, where we accepted that they had complied with the rules as written.”