Transliteration of first name question

[mack62]

I am a Canadian citizen who recently became a naturalised British citizen. My wife is from Russia and when her indefinite leave to remain was issued (18 months ago), the Roman alphabet spelling of her first name was "Yulia" as this is what was on her Russian passport, all her previous passports and our marriage certificate. After her BRP was issued in this name, her Russian passport was about to expire so she travelled back to Russia to renew it. When they issued her a new passport, they had changed the Roman spelling of her first name (to "Iuiila"). She complained but they told her that they have new rules on transliteration and that it cannot be changed. Obviously the Cyrillic spelling of her name is consistent on all her Russian documents.

We are working on her citizenship application and confused about how to handle this situation. If we use the new spelling in the application, it will be inconsistent with all her previous interactions with the home office. If she uses the old spelling we are concerned that she will be unable to get a British passport assuming that her application is successful. She is still in possession of all her previous passports that show the previous spelling of her name. Any advice or previous experience would be much appreciated.