A judge will consider an appeal by the trans rights charity Mermaids on Friday against the Charity Commission’s decision to award charitable status to the new gay rights organisation LGB Alliance. It is understood to be the first time one charity has attempted to strip legal status from another.

The highly unusual hearing will focus attention on increasingly fractious debates over sex and gender identity, and the legal definitions of same-sex attraction and sexual orientation.

Mermaids, which supports transgender, nonbinary and gender diverse children and their families, launched an appeal last year against the Charity Commission’s grant of charitable status to the LGB Alliance. It argued that the group was set up primarily to lobby the government to restrict the legal rights afforded to transgender people.

Challenges to Charity Commission decisions are usually prompted by allegations of financial abuse or mismanagement, but this hearing at the General Regulatory Chamber will require the judge to consider whether the purpose of LGB Alliance is “exclusively charitable for the public benefit”.

Preliminary legal documents submitted by the charities will also force lawyers to consider the two charities’ polar opposite world views.

If the court decides that the Charity Commission was wrong to award charitable status to LGB Alliance, the ruling could have implications for other charities, potentially making them vulnerable to legal challenges by institutions with conflicting outlooks.

The legal discussion will set the LGB Alliance’s position that there are only two sexes and that gender is a social construct against Mermaids’ position that transgender people’s gender identity should be affirmed.

In preliminary legal documents, Mermaids cited a speech by one of the LGB Alliance’s founders, Kate Harris, where she said she and colleagues were “building an organisation to challenge the dominance of those who promote the damaging theory of gender identity”.

Mermaids’ legal papers also claim that LGB Alliance has campaigned to stop Mermaids from advising schools and other government bodies on transgender rights.

LGB Alliance’s website states that it opposes gender identity ideology, and believes it is “harmful to gay men and lesbians, as well as teenagers grappling with their sexual orientation”.

In the complex and evolving world of LGBTQ+ rights, the creation of the LGB Alliance in 2019 followed a change in direction from Stonewall, which moved in 2015 from being the UK’s largest lesbian, gay and bisexual charity to an organisation that also fought for the rights of trans people.

LGB Alliance states that it believes the issues faced by “people who are attracted to the same sex (homosexual/bisexual) are different from those of transgender people”.

In its preliminary submissions, LGB Alliance sets out its position that same-sex attraction should be defined by biological sex (male or female) not by gender identity, at a time when many mainstream charities have shifted to a different definition of same sex-attraction, based on attraction to someone’s gender or gender identity, rather than someone’s biological sex. It says it was founded in part to disrupt a narrative that critics of Stonewall were homophobic.

It campaigns for an end to the medicalisation of gender non-conforming children and young people, and states that it believes the desire to transition gender can be a response to the homophobia of the parents or peer groups; it also raises concerns about the use of puberty blockers.

In a press statement, Mermaids said LGB Alliance’s real purpose was “the denigration of trans people and the destruction of organisations that support them, in particular through political lobbying and campaigning for changes to the law. These are not charitable purposes for the public benefit; they are political objectives designed to roll back legal protections for trans people”.

The statement added: “Mermaids, along with the country’s leading LGBTQ+ charities and organisations, speak with the single voice of a single community when we say we will not be divided.” But LGB Alliance states that there is no uniformity of outlook and they represent a divergent position.

The Charity Commission considered concerns about LGB Alliance before coming to its decision last year to award charitable status. However, it concluded that LGB Alliance was established for “exclusively charitable purposes”, and would work to promote the elimination of discrimination on the grounds of sexual orientation.

It found that “a purpose of promoting the equality and human rights of lesbian, gay and bisexual people is not inherently discriminatory and does not necessarily have the effect of inhibiting the rights of transgender people”. It noted that the charity’s website states: “Disagreement does not equal hate.”

Mermaids’ action is backed by the Good Law Project, which, like LGB Alliance, has launched a crowdfunding appeal to pay for legal costs.

Jo Maugham, the director of the Good Law Project, said: “Charitable status is for those who serve the public good … We do not believe they meet the threshold tests to be registered as a charity.”

LGB Alliance said in a statement: “LGB Alliance is the only registered charity in the UK that exclusively supports lesbians, gay men and bisexuals. This is the first time that a registered charity has challenged the registration of another charity in court.”

The hearings are expected to conclude next week, and the judge will subsequently deliver a fresh ruling on whether or not LGB Alliance has charitable status.