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1. These shoplifting charges will not fail your application because they took place a long time ago. Essentially, the Home Office will grant citizenship even if the person has offended so long as the convictions are "spent" in accordance with the Rehabilitation of Offenders Act which provides that minor offences become spent after seven years after the sentence expires. So here, you don't need to worry.
2. HOwever, you should be aware that you need to have a Permanent Residence card for one year before you make your citizenship application. Here is a link to he application form https://www.gov.uk/government/uploads/system/uploads/attachment_data/file/505032/EEA_PR__03-16.pdf
3. A Permanent Residence card is necessary in order that you may show you were visa free in the UK BEFORE you apply for citizenship for a period of one year. There is no need to apply for Indefinite Leave to Remain. You can go straight to citizenship and apply for it.
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