The management of the Spetz Ltd group requires advice on the tax position of a company incorporated and trading overseas, and the income tax treatment of the costs relating to an employee working abroad.

Kraus Co:
– Is incorporated in, and trades through, a permanent establishment in the country of Mersano.
– Has no taxable income or chargeable gains apart from trading profits.
– Has taxable trading profits for the year ended 30 September 2013 of £520,000, all of which arose in Mersano.
– Is not a controlled foreign company.
– Has not made an election to exempt its overseas trading profits from UK tax.

Required:
(b) (i) Explain how to determine whether or not Kraus Co is resident in the UK. (3 marks)