Cheap bicycle speedos don't expect the bike to do 50 mph .. so may not function at speed - thus the legal requirement failure is possible. Sigma ones usually function at speed. Placement of the sensor is critical - you don't want it close to the centre of the wheel but out towards the rim - this maximises the 'open circuit' time minimising the effects of the cable capacitance maximising the possible maximum speed. Don't think about a 'wireless' one - they can suffer from the bikes spark plugs giving off interference.
GPS speedos fail to function in longer tunnels - thus they can fail legal requirements. The tunnel shields the speedo from 'seeing' satellites that the GPS uses to calculate speed. Similar things can happen where tall buildings obscure large portions of the sky.
Of course this assumes the MOT/MSVA tester is aware of the problems and cares.
The easiest way is to have the original equipment functional. Easiest in that testers will recognise it and not question it if it basically functions.
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