Yes, the correct answer here is to erase the disk. Backup disks using APFS have 
one logical volume per machine, either in the same APFS container or a 
different one, but always different volumes. The only exception is where the 
backup happens over a network; then the volumes are stored inside sparse image 
bundles on the backup disk.

So open Disk Utility, go to the View menu and choose Show All Devices, then 
choose the physical disk in the tree and press the Erase button in the toolbar, 
format it as APFS with a GUID scheme (these should be defaults but check), and 
if you’re very lucky you’ll be immediately prompted to use Time Machine on that 
disk but if not, just add the disk in Time Machine settings, add encryption as 
desired, and off you go.

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