Not withstanding H21's views.. and as said he knows more about this than most ... but we had a "lecture" by a serving policeman as part of a roadsafety thing .. and this question came up.
His answer was as I posted.... basically if he checked vehicle he enters the registration, the computor tells him the current state of MOT/Tax/Insurance. The MOT info is the latest on the system.
So a fail will come up, he can then ask the questions like ... is this on its way home from the fail.... on it's way to be repaired... or on its way back for a retest, which are, he said, the only 3 legal times you can drive a "failed" MOT... regardless.
If the fail is so bad as to have a "prohibition" placed on it (as H21 mentions) it cannot even be driven under those conditions and would have to be trailered.
Now, I accept he might have told us wrongly .... but that is what he told us .. 
You man speaketh rowlocks, albeit with the best of intentions.
Once a car has one full years test that remains in force until its expiry or a PG9/VG9 prohibition notice is issued by the Police or VOSA.
If you subsequently test the car anythime thereafter upto one month before its expiry and it passes, you get a 12 month ticket. If it is tested within the last month and it passes, you get a new ticket with upto 13 months validity.
All fair enough so far.....
If it fails on these subsequent tests it may well flag as a fail on the system - on that date - but there is still an existing 12 month ticket and the only way that can be recinded is by the issue of a VG9/PG9 prohibition.
As retold to me by VOSA managers who oversee and teach VOSA inspectors who teach MOT testers and examine testing stations that issue certificates....