HMRC do not agree with the Football League and Premier League rule that clubs most pay back 100 per cent of debts owed to other clubs or players, but do not have to meet unpaid commitments over income tax and national insurance.
Under the company voluntary agreement Portsmouth proposed to come out of administration, non-football creditors will receive only 20 per cent of money owed.
They argued in the High Court this week that the policy was unfair, and also that the payment of image rights to players was a way of paying wages by unfairly circumventing the tax system.
The High Court ruled in Portsmouth's favour on Thursday, however, and HMRC have surprisingly decided not to go the next level to the Court of Appeal. Both parties had indicated before the verdict that they would appeal.
"Our aim when pursuing debt of any kind is to achieve a fair outcome for the taxpayer and we will take this forward in the wider context of the football industry through separate and outstanding legal proceedings over the status of the so called 'Football Creditors Rule'," read a statement from HMRC.
Mr Justice Mann, who delivered the verdict, said he made the decision as HMRC would receive nothing if he upheld their appeal and the club went into liquidation.
"There is no worthwhile way of money coming into the club other than by the CVA," he said.
"In my view, HMRC will not be worse off by the situation left by the CVA bearing in mind what the alternatives could be for the club.
"Those alternatives are liquidation, or expulsion from the Football League or worse, bearing in mind the loss of a lot of their assets."
David Lampitt, chief executive of Portsmouth, said it would still be several weeks before they could come out of administration.
"We have got a few more hoops to jump through in terms of exiting administration and the requirements of the Football League, setting up a new company and getting our Football League share transferred into that company," he told Sky Sports News.
"The process of building our squad is going to continue between now and the end of the transfer window. [Manager] Steve Cotterill is not going to panic buy, he wants to make sure he brings in players of a sufficient quality."