Hi gordonquinn,
You must have your both CPL/IR issued within the 3 year limit in order for your ATPL theory credits to count. If you obtain only one of these your theory will expire. An SE-IR will suffice at least initially, you can then upgrade to an ME-IR when ready.
The seven year limit is for the ATPL theory credit to count towards your ATPL once you have your CPL/IR. You do not need to have your ATPL issued within the seven years but you do need to ensure you do not let your IR lapse for more than seven years otherwise you'll be going back to the exam room for all 14 exams if you wish to upgrade to an ATPL at a later date.
Where are you based? I'm in an Archer group at Prestwick...
Best wishes.