Readers’ forum: How should couple be taxed on business incorporation?

Since the introduction of the restriction in mortgage interest relief many buy-to-let individuals have incorporated their property portfolio. I understand that to qualify for incorporation and SDLT relief it is necessary for the property portfolio to be run as a business and SDLT relief is available to a partnership.

A new client who owns a substantial property portfolio (of over 20 properties) with his wife wants to explore incorporating the portfolio. Currently they declare the rental income directly on their tax returns and they do not file any partnership returns.

I am satisfied that they are running a partnership business as both actively manage the portfolio and easily spend over 20 hours each week on this. My question is: should they be filing a partnership tax return to support their case if they decide to go ahead and incorporate and if so are they liable...