This is a regular "biker" topic....
I used a colour photocopy inside a waterproof holder attached to the back of the bike on the near side. Never ever had a problem and chatting to a Policeman running a "BikeSafe" course a few years ago his comment was "as long as you show it and our records show you have paid we are happy".
The police bikes in Wiltshire use a self adhesive holder on the inside of the screen that destroys the disk if it is removed. This is it:
Secure Tax Disk Holder 
