THE family business of former Rangers owner Sir David Murray fell into the red in its most recent financial year, with accounts hit by an exceptional charge of £1.2 million for a tax liability it had previously challenged.

Edinburgh-based Murray Capital Group made a loss of £1.75m before tax for the year ended December 31, which saw the firm continue to invest in its property development business. It made a profit of £360,000 the year before.

Accounts newly filed at Companies House show the turnover climbed to £78.7m from £73.4m, driven by an increase in revenues generated by Murray Metals, the group’s metal stockholding and processing business. Murray Metals, which supplies the construction, manufacturing and oil and gas sectors, mostly in England, is the group’s largest trading asset.

The accounts show the group made a £1.5m gain on the sale of investments. However it booked an exceptional item of £1.209m, relating to the tax treatment of payments made under a share-based payment scheme run by a portfolio company. The charge accounted for the bulk of Murray's pre-tax losses for the year.

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Murray notes in accounts that, at December 31, 2017, the company was “involved in challenging an enquiry by HMRC” regarding the scheme, with the tax authority arguing that PAYE (pay as you earn) employer’s and employee’s national insurance had been underpaid.

Murray states in its accounts: “This was disclosed in the accounts to 31 December 2017 as a contingent liability and not recognised as a provision as management considered it unlikely that additional tax would be payable to HMRC. As at 31 December this evaluation was consistent with legal advice.

“Following further legal consultation from Queen’s Counsel and communication from HMRC, the directors considered that the facts and circumstances changed with regards to the tax treatment and that it was now more likely than not that a future cash outflow would be required.

“As a result the company has recorded a provision as at December 31 2018 of £1,209,272.”

David D Murray, managing director of Murray Capital, said it was “disappointing” to have recorded a loss for the year, while noting its performance had been “steady…rather than spectacular”.

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He said the firm had continued to invest heavily in its strategic land business, Murray Estates, during the year, but expressed “frustration” that two flagship developments in Edinburgh continue to be held up in the planning system.

Murray Capital recently saw plans for its International Business Gateway Project, a £500m office, leisure and residential development west of Edinburgh, called in by the Scottish Government planning minister. The decision came after the project was granted planning permission in May.

The company is also awaiting a verdict from the Scottish Government on its proposed £450m Edinburgh Garden District project, which was called in by ministers in February last year. That plan, which received planning permission in June 2016, proposes the development of 1,350 new homes, a primary school, nursery and a 40-acre park in a new village next to Royal Bank of Scotland’s Gogarburn headquarters in Edinburgh.

Mr Murray said the two projects would be “key game changers” for the company, noting that if consents are secured it would have a “significant impact for us as a family business going forward”.

But he expressed dissatisfaction with the planning process. “I think if you speak to most developers, they will tell you the same as well – the frustration, the time that it takes and the actual process.

“And the lack of communication you get is poor as well.”

Mr Murray, referring to the Garden District project, added: “I understand the pressures that they are all under, but we’re talking about a project that’s going to deliver thousands of jobs, millions of pounds of impact investment into west Edinburgh, and we’re just waiting and waiting.
“We also have partners and people who work with us, but they won’t wait around forever.”
The accounts show that work is now under way at Kingdom Park in Fife, where the firm is developing 1,100 homes, new retail units and leisure space in Kirkcaldy over the next 10 years. The project is supported by the Scottish Government’s Housing Infrastructure Fund.
Meanwhile, Mr Murray said the company continues to see opportunities to invest in businesses in Scotland and England, often as a co-investor with private equity and venture capital partners. He noted that deals continue to be done despite the backdrop of political uncertainty.
Since year end, the company completed the sale of commercial property Exchange Plaza in Edinburgh to M&G Real Estate for £54m. 
Noting that the firm had owned and developed the property over 14 years, Mr Murray said the sale was a “nice deal for us”.
The accounts show the firm employed an average of 251 staff over the period. Directors’ remuneration rose to £754,000 to £670,000, with the highest-paid director receiving emoluments of £214,000, up from £208,000.
The company had net assets of £40.7m at December 31.