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A charity plans to sue an NHS trust alleging it has failed to cover the costs of running five residential care homes, in a case that could set an important precedent.

Praxis Care Group, which was contracted to run the homes for people with learning difficulties in Northern Ireland, said it had been “subsidising” Sperrin Lakeland Trust to the tune of more  than £1m.

Bill Halliday, director of development at Praxis, estimated the group had lost about £400,000 a year over the past three years to meet the costs of running the homes, which are used by 50 adults and employ about 80 staff.

“It is unreasonable that any charity should be placed in this position and forced to run at a deficit,” he said.

Saskia Daggett, Compact advocacy manager at the National Council for Voluntary Organisations, said: “Charities are being put in the position of fund-raising to subsidise statutory services, but they are often too scared to sue for fear of losing contracts.

“If Praxis wins, public authorities will be shown that they must ensure full cost recovery.”

Sperrin Lakeland Trust was unavailable for comment.