Born in Long Eaton, Derbyshire, McGugan was a product of Nottingham Forest's youth system. He made his debut for the club eight days before his 18th birthday on 17 October 2006, coming on as a 69th-minute substitute for Kris Commons in a 2–1 win at Gillingham in the Football League Trophy. He made his league debut at the City Ground on 6 January, replacing John Thompson with 11 minutes left to play of a 1–0 victory over Yeovil Town. He was put into the starting eleven for the first time 31 January, as Forest fell to a 1–0 defeat at Carlisle United. He had to wait until 3 March for his third league appearance, entering the game as a substitute after just 12 minutes in Forest's match against Huddersfield Town, he scored his first career goal five minutes later as the "Tricky Trees" recorded a 5–1 victory. Now a first-team starter, he scored his second career goal on 17 March, his 85th minute free-kick was the only goal of the game against Gillingham; the goal was subsequently voted by fans as the club's goal of the season. Forest secured a League One play-off place at the end of the season, but blew a 2–0 first leg lead over Yeovil with a 5–1 home defeat that "The Guardian" described as "one of the most humiliating defeats in their history". The 2006–07 season would still prove a highly successful one for an 18-year old McGugan though, as he finished the campaign as a member of the starting eleven, claiming two goals in 18 appearances.