The last time I remember flying in London, transponders were not required in uncontrolled airspace under the TMA. So you won't get any TCAS protection if someone busts vertically anyway.
The OP claimed the microlight was flying inside the CTR. To my knowledge, that is controlled airspace. Busting a controlled area and being cleared to enter it are two completely different issues, we're discussing the possibility that it might have been CLEARED to be flying where it was (purportedly) been seen flying.
You may want to enter terminal airspace to save time and fuel on your journey. You also let the controller know who you are and what you want to do. They will also give you a route to operate safely so nobody is panicking if you bust.
Again, the alleged offender was (allegedly) seen circling around without apparent intention of flying from some point A to some other point B. I don't think stating as your intentions "I want to circle around a bit to look at the pretty houses" will get you anywhere with your average air traffic controller, much less so in such a busy airspace as LONDON CTR.
So, I still maintain that the chances that
this particular ultralight was operating within the limits of an ATC clearance are rather slim, much slimmer than if it had been a Eurostar with Mode S transponder and TCAS flying along a well-known VFR crossing route.
