mandatory bans for overstayers was introduced earlier this year, althou if you left i think btw the end of march and oct, there was supposedly a concession, that the embassy wouldn't refuse you a visa just becuase you overstayed...
then if i remember correctly, for spouses they changed it, so they didn't make the ban mandatory.but if they say she has overstayed then she could face a years ban from the uk..
i think british immigration laws/rules over ride any european immigration laws..
COA is not a visa, never let a visa expire...
i take it your wifes visa had expired b4 you sent it to the HO ?