Portsmouth are free to move out of administration after Her Majesty's Revenue and Customs opted not to appeal against Mr Justice Mann's decision to find in favour of the Championship club.
HMRC had argued that the Company Voluntary Arrangement that Pompey brokered with creditors to bring the club out of administration was flawed.
However, Mr Justice Mann found against HMRC, saying:"I find that none of the five heads of attack by HMRC amount to unfair prejudice nor have they been materially affected.
"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."
Responding to the ruling, HMRC said:"HMRC is naturally disappointed not to have won this appeal and we can confirm that we do not intend to 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.
"This is an important and complex judgment and until we have had the opportunity to study it in detail we can't comment further."
Pompey should now exit administration via the CVA that will see all unsecured creditors paid 20p in every pound owed.
That would mean Steve Cotterill's side would start their Championship campaign on Saturday with no points penalty, provided an owner who passes the fit and proper persons test and meets the Football League's new regulations is brought in.
HMRC claimed it was owed £37million by Portsmouth while the club's lawyers had said Pompey would face extinction if the case had been lost.