I recently read an article which referenced how seemingly The Highway Code does not hold under-taking to be illegal.
In towns and cities overtaking on the left is allowed, as per Section 163 of The Highway Code. It's perfectly acceptable if the car in front is turning right, or pulling into a right-hand filter lane, so long as you exercise the same caution as you would if over-taking on the right.
Regarding motorway travel, Section 268 acknowledges that the outside lanes on a motorway may be travelling slower than those on the inside, and so undertaking vehicles in those slower-moving lanes is to be expected, particularly during congested times.
As the Highway Code specifically uses the words ‘MUST’ and ‘MUST NOT’ to indicate legal requirements and nowhere in The Highway Code does it say a driver 'must not' overtake using an inside lane. In fact, Section 268 states, “Do not overtake on the left or move to a lane on your left to overtake.” The use of 'do not' instead of 'must not' means it is technically legal to overtake in any lane except the hard shoulder.
Road users should avoid overtaking using the inside lane in any circumstance. The odd under-take here and there won’t attract too much negative attention from police, particularly if a situation obviously calls for it, but beyond that it could cause you problems.
You can be charged with ‘dangerous driving’, or ‘driving without due care and attention’, both of which can result in fines and up to eleven points on your licence, depending on the extent of the damage caused by your driving.
Section 264 says “You should always drive in the left-hand lane when the road ahead is clear. If you are over-taking a number of slower-moving vehicles, you should return to the left-hand lane as soon as you are safely past.”
In conclusion, it seems that it is perfectly legal to over-take in the 'wrong' lane, but not always advisable.
Considering the recent proposals to provide police with further powers to issue fixed penalty notices and points on licence for such issues as lane hogging etc I would not advocate any under-taking manoeuvre unless absolutely necessary.