I wasn't sure about this, I agreed with what oldtimer said and thought it was any part of the tyre past the arch was a failure. But according to the MOT manual, there is no mention of a wheel being outside of the arch;
http://www.ukmot.com/4-1.asp#Text_top
There is something about tyres rubbing, so they could argue that under full compression the tyre could be torn by the arch and therefore is a failure? You've also got the construction and use regs to take into account, although you'd have to get pulled over by some pretty irate cop to have to worry about that!
But having one wheel sticking out more tan the other is a definite failure!